Press Release: New Risks from Global Crisis Create Development Emergency,Say IMF, World Bank

IMF News, April 24, 2009

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The global financial crisis is imperiling attainment of the 2015 Millennium Development Goals (MDGs).
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 first goal of halving extreme poverty by 2015 from its 1990 level is still reachable based on current projections, but risks abound.
More than half of all developing countries could experience a rise in the number of extreme poor in 2009.
The proportion experiencing a rise in extreme poor is likely to be still higher among low-income countries and countries in Sub-Saharan Africa—two-thirds and three-quarters, respectively.

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 in 2009.
The number of people living on under US$1.25/day in the developing world in 2005 was 1.375 billion, or 25percent of the population.
The MDG target is to halve the 1990 poverty rate (41.7 percent) to 20.9percent by 2015.
With extreme poverty projected to fall to 15percent by 2015, the target still appears likely to be met on aggregate, but this may change as the poverty reduction rate slows with declining growth.
Sub-Saharan Africa will not meet MDG1.

Developing world growth is projected to fall to 1.6 percent in 2009, from an average of 8.1 percent in 2006-07.
Global output is projected to contract by 1.3percent in 2009.
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.

The crisis calls for special focus on social protection programs and services that shield poor and vulnerable people from immediate hardship, while speeding up progress toward human development goals, particularly health.
Urgent funding must be provided for social safety nets, infrastructure, and small businesses in poor countries to enable a sustainable recovery.
Efforts to meet the health and education MDG targets must include strengthened social safety nets, more donor support, more efficient spending, and better leveraging of and involvement by the private sector.
In Sub-Saharan Africa and South Asia, half of MDG-related maternal, reproductive, and child health service provision is supplied by private entities (including civil society organizations).
In South Asia, 30 percent of primary and secondary education is delivered by private institutions.
The crisis gives added urgency to reinforcing programs such as control of major diseases including HIV/AIDS and malaria, health systems strengthening, and the Fast Track Initiative in education.

Net private capital flows to developing countries are in steep decline and could be more than US$700 billion lower in 2009 compared to their 2007 peak.
G-20 leaders agreed on April 2, 2009 to support a tripling of resources for the IMF to US$750 billion.
The G-20 supported a general SDR allocation equivalent to US$250 billion, US$100 billion of which will go directly to developing countries (US$19 billion to low-income countries).
The IMF’s concessional lending capacity for poor countries will be doubled.
The G-20 supported an increase in multilateral development bank (MDB) lending of US$100 billion to a total of US$300 billion over the next three years.
The G-20 will support the World Bank’s Vulnerability Framework, which funds infrastructure projects, safety nets programs, and financing for small and medium enterprises.
Official aid from the OECD’s Development Assistance Committee members rose by about 10 percent in real terms in 2008.
Aid in 2008 was still about US$29 billion short of the Gleneagles target of US$130 billion per annum by 2010, and aid to Sub-Saharan Africa was about US$20 billion short of the 2010 target of US$50 billion per annum.

Developing countries need about US$900 billion (7-9percent of their GDP) a year to maintain infrastructure and start new projects, yet only half this amount is actually spent.
The funding gap for new infrastructure projects has risen by about US$20 billion a year as prospects for private sector financing recede.
The World Bank is launching a new Infrastructure Recovery and Assets (INFRA) platform which could provide at least US$15 billion per year over the next three years.
To stabilize greenhouse gas atmospheric concentrations, the latest estimates suggest that additional investment to combat climate change required in developing countries will range from US$150 billion to US$200 billion per year over 2010-20 and will rise to US$400 billion per year on average beyond 2020.

Firm resolve is needed to follow through on the G-20 promise to refrain from protectionism, given that several G20 members failed to adhere to their November 2008 commitment.
The crunch in international trade finance will be addressed through the April 2009 G-20 agreement to ensure the availability of at least US$250 billion of trade finance over the next two years through their export credit and investment agencies, and through the MDBs.
The agreement includes up to US$50 billion of trade liquidity support over the next three years through the IFC’s Global Trade Liquidity Pool.

Press Release: New Risks from Global Crisis Create Development Emergency,Say IMF, World Bank — April 24, 2009