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Financial crisis has 'left a scar'-Chief Economist
By Masahudu Ankiilu Kunateh, Ghanadot
Accra, Oct 8, Ghanadot - The global financial crisis may be
easing, but it is far from over, according to the World Bank’s
Chief Economist, Justin Lin.
The World Bank is holding its annual meetings in Istanbul,
Turkey, and those meetings prompted an assessment of the global
economy from Justin Lin.
Lin is the World Bank’s chief economist, and he says the
situation may be improving, but the financial crisis of
2008-2009 “has left a scar”. He warns that it will be years
before developing economies bounce back.
Lin, meeting with other leading economists at the Council of
Chief Economists Roundtable in Turkey, reminded them that the
world needs to be ready for the challenge of fixing the damage
left by the crisis.
For example, Lin says, the residue from the financial crisis
will be apparent for years, with unemployment high and
consumption low. He says that India will bounce back with an 8
percent growth rate, but the country was roaring along at 10
percent before the crisis. Ethiopia, he says, will come back at
7 to five percent, and but it was showing what he called “high”
rates of growth of 11 percent before last fall.
Along with Justin Lin from the World Bank, the Council of Chief
Economists Roundtable also featured statements from Eric Berglof
from the European Bank for Reconstruction and Development,
Stephan Cecchetti from the Bank for International Settlements,
Ali Ifzali from the Islamic Development Bank, Louis Kasekende
from the African Development Bank, and Jong-Wha Lee from the
Asian Development Bank. The topic of discussion for the
roundtable was "Scenarios for Global and Regional Economic
Recovery and Growth."
Ghanadot
Bank Group receives support for more funds, expanded ‘voice’
By Masahudu Ankiilu Kunateh, Ghanadot
The joint World Bank-IMF advisory body, known as the Development
Committee, committed to the G20’s call for more resources for
the bank to help developing countries respond to the global
economic crisis.
Concluding its first day of talks on the Bank’s work and impact
at the 2009 annual meetings, the committee expressed support for
a general capital increase, a multibillion multilateral food
trust fund, and a new crisis facility for the world’s 79 poorest
countries.
The Development Committee also agreed to “voice” reform to
ensure developing countries get a bigger say in how the
institution is run—an increase of at least 3 percentage points
in voting power, in addition to the 1.46 percent already agreed.
This would give them a share next year of at least 47 percent.
In a statement issued Monday, the Development Committee set a
definite decision point for shareholders for Spring 2010 on IBRD
and IFC capital needs and “committed to ensure that the World
Bank Group has sufficient resources to meet future development
challenges.”
The committee noted the Bank’s “vigorous response” to the
crisis, including a tripling of IBRD commitments to $33 billion
this year and IDA reaching a historic level of $14 billion.
They also said that IFC, which has invested $10.5 billion and
mobilized an additional $4 billion through new initiatives,
“combined strong innovation with effective resource
mobilization.”
“I am very pleased that the meeting that we had today at the
Development Committee provided significant support for the World
Bank’s work,” said President Robert Zoellick.
“We need to make protection for the most vulnerable a permanent
part of the world’s financial architecture,” he said. The global
economy still suffers the risk of a potential setback, Zoellick
said, and we still face the possibility of growing unemployment
lines and rising protectionism.
The committee said that core spending in low-income countries,
on health and education, for example, needs to be protected, and
asked that the a new crisis response mechanism be discussed at
an upcoming mid-term review of IDA performance.
The committee also called on the Bank Group to work with the
regional development banks to assess their respective roles and
methods of collaboration, and said it viewed “continuing
improvements in the corporate governance, accountability and
operational effectiveness” of the Bank Group as essential for
confronting the development challenges of the 21st century
Ghanadot
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