Financial market turmoil could result in higher developing-country demand for multilateral financing, World Bank President Robert Zoellick said March 17. He said that recent contractions in global credit had not caused borrowing costs for developing nations to spike, as occurred in prior financial crises. But added it was critical to keep an eye on emerging market debt spreads, Reuters reported. “They bear close watching now,” Zoellick told journalists in Geneva, referring to the differential rates that poor countries must pay to borrow funds. Market jitters appear to have caused some governments to issue smaller volumes of debt than they had hoped for, Zoellick said, and such trends could prompt poorer countries to turn to the World Bank as an alternative source for funds.
IMF managing director Dominique Strauss-Kahn has said that the current financial crisis calls for global responses. “I believe it is not appropriate to think that we can bring anything else than global responses to the current crisis,” Strauss-Kahn said at a conference on structural reforms in Europe organized by the Organization for Economic Cooperation and Development (OECD) on March 17. He said that multilateral organizations such as the IMF and the OECD should play an essential role in bringing long-term answers to crisis such as the current financial crisis.
The IMF and the World Bank on March 18 cleared Liberia’s entry into the Heavily Indebted Poor Countries (HIPC) initiative, a vital step toward canceling the country’s USD 4.7 billion debts and helping it rebuild from civil war. The IMF’s No. 2 official, John Lipsky, said the debt, owed to global institutions, other governments and private-sector creditors, was “simply unpayable and has to be forgiven.” The March 18 announcement is a vital step toward hoisting Liberia back into the international arena after its 14-year war and isolation. Earlier this week, the IMF restored Liberia’s voting rights after it cleared its arrears to the fund.
The World Bank said it has approved a USD 600 million loan to state-run power transmission company Power Grid Corporation of India. The company aims at strengthening the country?s electricity transmission system in order to increase reliable power exchange between regions and states. The World Bank noted that despite a booming economy, India’s growth potential is constrained by inadequate electricity services and limited power generation and supply infrastructure. Over 40 percent of the population is without electricity, while companies have to rely on back-up generators to ensure reliable supply.
Countries should resist new waves of economic protectionism as fears mount of a global recession Supachai Panitchpakdi, Secretary General of the UN Conference on Trade and Development (UNCTAD), told journalists this week. “There are all kinds of new waves of protectionism that might be misconceived, and misdirected at the elements from the South,” he said. Supachai said the upcoming UNCTAD conference in Accra, Ghana could provide an impetus to pushing Doha to an eventual conclusion. UNCTAD holds major conferences every four years, and this year some 3-4,000 delegates will meet from April 20-25.