Thursday, February 12, 2009

Crisis to trap 53 million in poverty

Crisis 'to trap 53m in poverty'
By Steve Schifferes
Economics reporter, BBC News
About 53 million people in developing countries will remain poor because of the world economic slowdown, the World Bank has said.

The Bank says the downturn will reverse many of the gains made in reducing poverty in developing countries.

It estimates that 40% of the world's 107 developing countries are "highly exposed" to the global crisis.

And it calls on the rich countries to devote 0.7% of their bail-out packages to help the poor in developing nations.

Poverty line

The global crisis is likely to keep 46 million more people below the absolute poverty line of $1.25 per day, and another seven million under $2 per day, compared with previous World Bank forecasts for 2009.

An earlier version of this story incorrectly stated that 100 million more people would remain poor.

"The global crisis threatens to become a human crisis in many developing countries unless they can take targeted measures to protect vulnerable people," said World Bank president Robert Zoellick.

"While much of the world is focused on bank rescues and stimulus packages, we should not forget that poor people are much more exposed if their economies falter."

The World Bank says the crisis will also delay progress towards reducing infant mortality, which could see 200,000-400,000 more children a year die if the crisis persists.

These developments will undermine the plans agreed by the UN to reach the world poverty targets agreed in the Millennium Development Goals by 2015.

The food and fuel price increases in 2008 pushed another 130-150 million poor people into poverty, the Bank estimates.

G7 meeting

The report comes as the G7 finance ministers - representing the world's richest nations - are meeting in Italy to discuss measures to restore confidence to the global financial system.

The US Treasury Secretary, Timothy Geithner, will be attending a G7 meeting for the first time, and may give details of the new measures planned by the Obama administration to deal with the crisis.

World economic growth is set to fall to just 0.5% this year, its lowest rate since World War II, the International Monetary Fund (IMF) warned last month.

The World Bank says that three-quarters of the developing countries most exposed to the crisis - many of them in sub-Saharan Africa - cannot raise the funds they need to curb the effects of the downturn.

The proposed "vulnerability fund" would help by funding safety net programmes for the poor, ensuring that investments in vital infrastructure go ahead, and supporting small enterprises and banks.

The Bank's private finance arm, the IFC, wants to invest $3bn in recapitalising distressed banks, and, along with Germany, has just pledged $500m to support micro-finance institutions which lend to the very poor.

Mr Zoellick says that "poor people in Africa should not pay the price for a crisis that originated in America".

Story from BBC NEWS:

Published: 2009/02/12 19:18:29 GMT

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