Developing countries urge more financial aid
WASHINGTON — An important group of developing countries urged advanced nations on Friday to step up financial aid to help them deal with the severe impact of higher food and energy prices and the turmoil in global financial markets.
The Group of 24 Developing Countries also wants the United States and other major industrialized nations to take decisive action to deal with the present economic and financial crises, specifically by more closely monitoring and supervising the markets.
The G-24 said Friday that coordinated international action is needed to prevent the emergence of a larger crisis and agreed the International Monetary Fund has an important role in responding to the current crisis. They also urged the IMF’s sister institution, the World Bank, to increase advice and financial support.
The G-24 met on the sidelines of the spring meetings this weekend of the two 185-nation Washington-based lending institutions founded after World War II to monitor the global economy and help poor nations reduce poverty. The G-24 includes developing countries from Asia, Africa and Latin America. China participates as an observer.
Jean-Claude Masangu-Mulongo, chairman of the G-24 and governor of Congo’s central bank, said the world was facing "an unprecedented financial crisis that began ... in the heart of the system, the United States, and is spreading."
He said a coordinated and collective international response led by the bank and the IMF is needed.
The G-24 communique was unusual in the amount of advice it offered advanced countries. Usually the communiques speak of how the G-24 will deal with recommendations it receives from the rich countries and the international financial institutions such as the IMF and World Bank. Ministers in several developing countries have noted smugly in recent months that the current crisis did not originate in one of their countries, as happened in the late 1990s, but in the United States, which enjoys the world’s largest economy.
The G-24 communique underlined "the need for developed countries to help the poorest developing countries to cope with spillover effects from recent events through stepped-up assistance." They said such aid should be additional to current aid flows.
The G-24 expressed its anxiety about the severe impact of high food prices on the population of developing countries, especially the poor. There have been food riots in recent weeks in countries ranging from Haiti to Egypt.
The communique called on the World Bank "to step up its policy and financial support to countries negatively affected by high energy and food prices and for the IMF to stand ready to assist countries with balance of payments problems" under an IMF program that created to deal with external shocks.
The G-24 welcomed a proposal made last month by World Bank President Robert Zoellick for a "New Deal for a Global Food Policy" to combat hunger and malnutrition through a combination of emergency aid and long-term efforts to boost agricultural productivity.
The ministers and central bank governors noted that their meeting took place at a time of "unprecedented turmoil in global financial markets and a significant downturn in economic growth and major uncertainty regarding global economic prospects, particularly in advanced countries."
They warned that the vulnerability of the global financial system may lead to a downward spiral in credit and economic growth.