13 October 2008

ActionAid charged that world leaders attending the World Bank/International Monetary Fund annual meetings failed to guarantee assistance for the world’s poorest countries, despite admitting that the most vulnerable could face "serious, and in some cases, permanent damage" from the global financial crisis.

Shefali Sharma, ActionAid International’s Food Crisis Task Force coordinator pointed out that the Bank’s funding response is more applicable to middle-income countries – with its plan to double non-concessional lending through the International Bank for Reconstruction and Development (IBRD) – and will do little to help low income countries.

Sharma said: "An extra $14bn in the World Bank’s lending to middle-income countries is a drop in the ocean for emerging markets, which have access to other sources of finance and often substantial foreign exchange reserves built up since the Asian financial crisis of 1997/1998.

It’s no help at all for the poorest countries, which have few resources of their own to cope with the burgeoning food, fuel and financial crises, particularly as the IMF is still imposing suffocatingly tight inflation and deficit targets.

"Ironically, the pressure of maintaining such restrictive economic policies may be what finally tips some developing countries over the edge in months to come."

ActionAid said that the final Development Committee communiqué merely reiterates past pledges to deal with the food and fuel crisis, but without any new aid commitments. Instead, the communiqué repeats previous policy recommendations that have little validity in the current state of affairs.