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Logo of Phnom Penh Post newspaper Phnom Penh Post - Poor countries say their problems forgotten

Poor countries say their problems forgotten

Poor countries say their problems forgotten

DEVELOPING countries complained Sunday that the global financial crisis will put their recent hard-won economic gains at risk while the rich nations focus only on their own problems.

The poorer countries could be hit twice by the crisis - finding it more difficult to get access to funding and as their exports fall as the crisis undercuts demand, Indian Finance Minister Palaniappan Chidambaram said.

"The developing countries will suffer for no fault of theirs. They did not cause the contagion. Many are not well-equipped to face the consequences," Chidambaram told the Development Committee of the International Monetary Fund and World Bank.

Oliver Buston, the European director of the anti-poverty ONE campaign said: "If we aren't careful, the ripple effects of the global economic crisis could become rip tides for the world's poorest nations."

"We must avoid a knee-jerk reaction to pull back from building on succession in the poorest nations as advanced countries search for solutions to the economic crises."

The Development Committee advises the World Bank and IMF on how to promote economic development in poor countries, many of whom feel their problems are being neglected amid the turmoil on global markets.

Concern for the future

The plight of the poor countries has been "largely forgotten", said Sierra Leone Finance Minister David Carew.

"We expect to see a reduction of inflows to Africa and that is of concern to us," Carew said, citing likely falls in remittances, foreign exchange reserves and foreign investment.

Worse still, the banking system in poorer countries could face volatility because of links with banks in the developed world which have been pushed to the brink by the crisis.

"Africa does not have (the) capacity for intervention" to help its banks that the developed world does, Carew said, adding: "The ripple effect of the crisis is coming ... likely later this year."

IMF head Dominique Strauss-Kahn warned on Saturday that it would be a mistake to forget the "other crisis" of soaring food prices and aid cutbacks faced by developing countries.

"We are in a big crisis but don't forget the other one," Strauss-Kahn said, adding that while food costs had moderated in recent months, "this bill is still unaffordable for poor countries."

With donor aid programs under pressure due to the financial crisis, the World Bank estimates that up to 100 hundred million people are at risk of falling into poverty because of higher food and energy prices.

"The large surge in food and energy prices - and an associated rise in inflation - present major policy challenges for most countries, further compounded by the uncertain global conditions as the financial crisis unfolds," said the IMF and World Bank Development Committee.

The IMF and especially the World Bank are tasked with aiding development and their annual meetings normally devote much time to reviewing progress made and new programs.


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