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Zoellick warns finance rescues may hurt poor

Posted By aaron On December 15, 2008 @ 3:10 am In Globalism | Comments Disabled

Simon Rabinovitch
London Telegraph
Dec 15, 2008

Wealthy nations must be careful not to cause more suffering to the developing world as they take bolder steps to boost their faltering economies, World Bank President Robert Zoellick said on Sunday.

Zoellick warned that poorer countries, already faced with mounting job losses, were vulnerable to the unintended consequences of policies crafted to rescue financial markets.

“Developed countries have guaranteed a lot of bank debt. It’s actually made it hard for developing countries that had good budgetary programmes to be able to go to market and issue bonds,” Zoellick said in an interview while touring the part of Sichuan province devastated by an earthquake in May.

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“It’s important for developed countries to recognize that at some point they’re going to need exit strategies for these guarantees or be able to discipline them,” he said. “I’m not saying that they should take that step now but otherwise developing countries will be bearing the brunt of this.”

He also said international responses to humanitarian disasters, like the May 12 earthquake which killed more than 80,000 people, could be hampered by economic woes afflicting wealthy countries.

Zoellick said he feared that it would be difficult to replicate the outpouring of donations from around the world after the disaster.

The World Bank is hammering out the details of a $710 million earthquake reconstruction loan, its largest emergency loan ever.

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