Santhosh V. Perumal
Tuesday, Dec 02, 2008
THE global financial crisis has brought an abrupt end to a long era of economic growth, and if not handled properly it could result in social unrest and political instability, according to the United Nations.
Seeking additional emergency financing from the International Monetary Fund (IMF) and the central banks of the advanced countries, the UN Secretary General Ban Ki-moon suggested a six-point agenda to set the world economy in order.
“If not handled, today’s financial crisis will become tomorrow’s human crisis. Social unrest and political instability will grow, exacerbating all other problems,” he said, declaring open the Follow-up International Conference on Financing for Development
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The ultimate danger would be a cascading series of crises, each building on the other, with potentially “devastating” consequences for all, he said.
He welcomed the fiscal and monetary rescue packages and stimulus plans launched by major economies, but said that probably more needed to be done since the vast sums committed to bail-out “dwarfed” overseas development assistance, which remains a crucial pillar of development finance for many countries.
Elaborating on the six-point agenda, he said there was a need to address the liquidity needs, especially for the developing countries.
He said that the wealthiest nations had moved to keep credits flowing at home, and added that credit flows must be ensured to developing countries as well.
Their (wealthy nations’) currencies were not reserve currencies; their foreign reserves, often large, were not sufficient to withstand the threat coming from today’s crisis, Ban Ki-moon said.
“We, therefore, need additional emergency financing from the IMF and the central banks of the advanced countries. Without it, the credit crisis will spread to emerging economies,” he said.
In this process, growth would stall, hurting them and the world as a whole, he said.