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World Bank: Economic crisis turning into calamity

(Agencies)
Updated: 2009-04-27 17:25

WASHINGTON -- The global financial crisis could become "a human and development calamity" for many poor countries, the World Bank said, urging donor nations to speed delivery of money they have pledged and consider giving more.

Commenting about financial assistance for the swine flu outbreak, Mexico's Secretary of Finance Agustin Carstens, center, who serves as chairman of the Development Committee, responds to a reporter's question during a news conference at International Monetary Fund headquarters in Washington, Sunday, April 26, 2009. [Agencies]

Developing countries, its main constituency, face "especially serious consequences with the crisis driving more than 50 million people into extreme poverty, particularly women and children," the bank said Sunday.

Related readings:  WB-IMF: Financial crisis turning into human, development crisis  WB chief calls for close relations between US and China  WB: Global trade to shrink by most since 1920s

Bank President Robert Zoellick said some of the poorest economies are being hit by "second and third waves of the crisis." He said no one knows how long it will last or when recovery will begin.

"There is a widespread recognition that the world faces an unprecedented economic crisis, poor people could suffer the most and that we must continue to act in real time to prevent a human catastrophe," Zoellick said.

The bank will respond by tapping its healthy balance sheet to increase lending up to $100 billion over three years and launch initiatives in social protection, public works and agriculture, he said.

Zoellick spoke at a news conference that wrapped up weekend meetings of the World Bank and its sister institution, the International Monetary Fund, aimed at determining what additional action is needed to counteract the worst financial crisis in decades. The weekend kicked off with a meeting of finance ministers of the Group of Seven major industrialized nations that expanded into a meeting of the Group of 20 nations, bringing in such rising economic powerhouses as Brazil, India and China.

There was general agreement at the meetings that voting shares of those nations in the IMF and World Bank should be increased to reflect the changed global economic situation. Ministers pledged to examine ways to do that.

The closing news conference took an unexpected turn when Mexican Finance Minister Agustin Carstens, chairman of the World Bank policy-steering committee, outlined steps his government was taking to confront an outbreak of swine flu. He disclosed that the bank was providing a $25 million loan for medicine and logistical help and another $180 million for operational needs.

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