Monday, March 09, 2009

What in the world to do now? A preview to the G20 meeting

So if the poor nations don't have enough money to bail themselves out of the global recession...

and the World Bank and the IMF don't have enough money to bail the poor nations out...

and the rich nations don't have enough money to bail the poor nations out..

what do the leaders of the world do?

Do we think they will be able answer this question during the G-20 meeting coming up in London?

As a preview to the meeting and the problems that will be talked about, Reuters Alert-Net has an article interviewing think tanks that monitor the World Bank and the IMF. Writer Megan Rowling asks the tough questions.

"With likely declines in aid and the drying up of other sources of finance, poor countries are in a bind as to where they can get cheap finance," said Jesse Griffiths, coordinator of the London-based Bretton Woods Project, an advocacy organisation that monitors the World Bank and International Monetary Fund (IMF).

The World Bank says the global economic crisis is trapping up to 53 million more people in poverty in developing countries, threatening the achievement of internationally agreed targets to reduce poverty, with child mortality rates set to soar.

Almost 40 percent of 107 developing countries are highly exposed to the poverty effects of the crisis and the remainder are moderately exposed, with less than 10 percent facing little risk, according to the Bank. In response, governments need to finance job creation, essential services, infrastructure and safety net programmes for the vulnerable, it says.

Sam Worthington, president of InterAction, a coalition of 175 U.S.-based aid agencies, told AlertNet developing countries should not be left to cope on their own. "Any effort to jumpstart the global economy and reform global financial systems must take into account the severe impact of this economic recession on the world's poorest people ... We as the affluent part of the world bear a responsibility for these negative consequences."

Nick Highton, head of the Centre for Aid and Public Expenditure at the London-based Overseas Development Institute, urged donors to use existing aid mechanisms rather than inventing new initiatives to deal with the credit crunch, which would place an extra burden on recipient countries.

"I would argue it's...about getting quick injections of flexible money into government budgets so they can do their own fiscal stimulus package if they haven't got the resources already," he told AlertNet.

But will rich countries be prepared to offer this kind of support just as they're digging deep to bail out their own struggling economies and ailing banks?

"It's very hard to see how maintaining or increasing aid spending does - except by a rather long, tortuous route - generate a fiscal stimulus for the rich countries that are providing aid. So there's every reason to be not too optimistic about this," Highton said.

"And it's most unfortunate because...this an example of when you want aid to be exactly the reverse," he added.

No comments: