Doha, Qatar (BBN)- The World Bank on Saturday called on the industrialized nations to keep up their aid flows to developing countries amid the economic downturn, one of the implications of which is an anticipated steep decline in private capital flows to developing countries.
“Over the past year, many developing countries have already had to cope with high food and fuel prices, and are now faced with a third problem of unprecedented proportions,” said Justin Lin, the World Bank’s Chief Economist and head of delegation in a speech prepared for the United Nations International Conference on Financing for Development in Doha, Qatar, “While the channels of transmission may differ, virtually no developing country—whether an emerging market or a poor country in Africa—has escaped the impact of the widening financial crisis.”
According to World Bank estimates, net private capital flows to developing countries could drop from about US$1 trillion in 2007 to roughly half that level in 2009. Given this projection, it is important to intensify efforts to catalyze and leverage private capital in support of development, including through innovative public-private partnerships.
“The global financial crisis is likely to set back the fight against poverty and progress toward the Millennium Development Goals,” said Lin, “Sharply tighter credit conditions and slower economic growth may affect investment in education, health, and women’s empowerment, and undo many of the hard-won gains in recent years.”
The World Bank Group is ready to assist financial and private sectors in responding to the crisis, support countries in managing fiscal challenges, and avoid cuts and delays in investments upon which economic recovery and long-term development depend, according to a press statement.
BBN/SI/SSR/AD-29November08-2:55 PM (BST)