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World Bank, IMF: Financial crisis turning into human, development crisis
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13:58, April 25, 2009

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The global financial crisis, the most severe since the Great Depression in 1930s, is rapidly turning into a human and development crisis, warned an IMF-World Bank report released Friday.

The crisis originated in the developed world, but it has spread quickly and inexorably to the developing world, sparing no countries, said the Global Monitoring Report 2009: A Development Emergency (GMR).

The crisis is imperiling attainment of the 2015 Millennium Development Goals (MDGs) and creating an emergency for development as the poor countries are especially vulnerable for they "lack the resources to respond with ameliorative actions."

Most of the eight globally agreed goals are unlikely to be met, including those related to hunger, child and maternal mortality, education, and progress in combating HIV/AIDS, malaria and other major diseases, the report warned.

It also noted that, although the first goal of halving extreme poverty by 2015 from its 1990 level is still reachable based on current projections, risks abound.

New estimates show that more than half of all developing countries could experience a rise in the number of extreme poor in2009.

This proportion is likely to be still higher among low-income countries and countries in Sub-Saharan Africa-two-thirds and three-quarters, respectively.

It is estimated that an additional 55 to 90 million people will be trapped in extreme poverty in 2009 due to the worldwide recession.

The number of chronically hungry people is expected to climb to over 1 billion this year, reversing gains in fighting malnutrition and making the need to invest in agriculture especially urgent.

"With simultaneous recessions striking all major regions, the likelihood of painfully slow recoveries in many countries is very real, making the fight against poverty more challenging and more urgent," said John Lipsky, IMF Deputy Managing Director.

The crisis will affect all developing countries over the next two years, through contracting export volumes, lower prices, slowing domestic demand, declining remittances and foreign investment, reduced access to financing, and shrinking revenues.

"For poor countries, this is a crisis upon crisis. It comes on the heels of the food and fuel crisis," said the report. "The triple jeopardy of the food, fuel, and financial crisis is pushing many poor countries into a danger zone, imposing rising human costs and imperiling development prospects."

Developing world growth is projected to fall to 1.6 percent in 2009, from an average of 8.1 percent in 2006-07, according to new IMF projections. Global output, meanwhile, is projected to contract by 1.3 percent this year.

"Worldwide, we have an enormous loss of wealth and financial stability," said Justin Yifu Lin, World Bank Chief Economist. "Millions more people will lose their jobs in 2009, and urgent funding must be provided for social safety nets, infrastructure, and small businesses in poor countries, for a sustainable recovery."

The GMR cautions that, while the crisis calls for a special focus on social protection programs and services that shield poor and vulnerable people from immediate hardship, it is also vital to speed up progress toward the human development goals, particularly those related to health where prospects are gravest.

"The crisis calls for a reaffirmation of the world's commitment to the promise of the MDGs and it gives added urgency to reinforcing key programs in health and education, such as control of major diseases including HIV/AIDS and malaria, health systems strengthening, and the Fast Track Initiative in education," said Zia Qureshi, lead author of the report and World Bank advisor.

Source: Xinhua

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