The World Bank said late on Tuesday that it was gearing up to lend US$100 billion over the next three years to protect developing nations from the economic contagion spreading from richer Western countries.
Dashing hopes that the world’s emerging economies might escape relatively unscathed from the downturn, the bank said it expected almost 40 million people to fall into poverty as a result of the turmoil caused by the global credit crunch.
The bank said it expected growth in developing countries to be 4.5 percent next year, against the 6.4 percent it had previously pencilled in, adding that each percentage point off growth rates meant 20 million people slipping into poverty.
This, it added, would be in addition to the 100 million pushed below the poverty line by the sharp increase in food and energy prices over the past two years.
Speaking ahead of the meeting of the G20 group of developed and developing nations in Washington this weekend, World Bank president Robert Zoellick said: “Leaders meeting on Saturday to discuss the global financial crisis must not lose sight of the human crisis. As always, it is the poorest and most vulnerable who are the hardest hit.
“The response to this crisis must be global, coordinated, flexible and fast. While the challenges need to be addressed at the country level, it is more critical than ever that the international community acts in a coordinated and supportive way to make each country’s task easier,” Zoellick said.
The bank believes next year will be one of the weakest for global activity since World War II, with a 0.1 percent contraction in high-income countries leaving global growth at only 1 percent.
Sharply tighter credit conditions and weaker growth are expected to cut into government revenue in poor countries and affect their ability to invest to meet the goals set by the UN for education, health and gender equality, as well as the long-term infrastructure expenditure needed to sustain growth.
As a result, the bank is planning to increase lending to developing countries from US$13.5 billion this year to US$35 billion annually next year and in 2010 and 2011. Aside from expanded lending, the bank is also working to speed up grants and long-term, interest-free loans to the world’s 78 poorest countries, 39 of which are in Africa.
Help will be targeted at countries that have had to shelve plans to enter global capital markets and those affected by the recent plunge in commodity markets, the weakening of exports or the drying up of remittances from abroad.
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