DUSHANBE, October 10, 2008, Asia-Plus — On Thursday October 10, the World bank Group President, Robert B. Zoellick, gave a press briefing at the IMF-WB annual meeting 2008. It was posted on the WB website.
Mr. Zoellick noted that they were meeting at a momentous time. “In July, at the G8 summit, I said that developing countries were facing a double jeopardy from the impact of high food and fuel prices. But what was then a double jeopardy is now a triple hit–food, fuel, and finance–threatening not just to knock the poorest people down, but to hold them down,” said the WB Group President. “The events of September could be a tipping point for many developing countries. A drop in exports will trigger a fall-off in investments. Deteriorating financial conditions combined with monetary tightening will trigger business failures and possibly banking emergencies. Some countries will slip toward balance-of-payments crises.”
“The World Bank economic staff is tentatively forecasting that the growth rate of developing countries could decline from 6.6 percent next year, our April forecast, to closer to 4 percent. Now, this is still a respectable rate of growth, but the deceleration would be so sharp as to feel like a recession. And many countries would do much worse than this broad average suggests. It would be a significant hit.”
Some 28 countries are already fiscally highly vulnerable from the twin shocks of food and fuel. Currently these countries, on average, are set to receive no increase in project and program aid. G-7 countries as a group are still far behind their Gleneagles commitments.
Asked about the most needy and vulnerable former Soviet Union republics and how international community could help them, Mr. Zoellick noted that as part of the preparation for the meetings of the Development Committee, they tried to look at countries” fiscal positions that were harmed by the high food and fuel prices, and we identified some 28 that are most vulnerable. “We then looked at their debt positions to see how much room that they had. And then we looked at the aid prospects, and we”ll be putting this up on the Web later today. They tend to be the poorest countries.”
According to him, now, in Central and Eastern Europe and in Central Asia, some countries are suffering from the energy and fuel issue. The WB head noted that they have tried to be of support to Tajikistan, Kyrgyzstan. “I was in Kazakhstan, which has done a good job but faced a problem with its banking system,” said Zoellick, “…Ukraine is obviously dependent on global international issues, and, obviously, Russia has also been hit by these problems.”
