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Press Release

12 October 2008

Urgent action needed to tackle global financial crisis – Douglas Alexander

Governments, the IMF and the World Bank, need to act together to help developing countries cope with the twin shocks of a global financial crisis and high commodity prices, International Development Secretary Douglas Alexander said today.

People in developing countries are starting to feel the effects of the financial crisis as it ripples into emerging market economies and slows economic growth. The World Bank has identified 28 countries that are fiscally vulnerable to food and fuel prices. It estimates that 44 million additional people will suffer from malnutrition. It has already set up a $1.2 billion Global Food Price Crisis Response programme and a new energy initiative for the poor.

Attending the World Bank’s Annual General Meeting, he outlined three issues that the UK, the Bank and international partners have agreed to act on:

Mr Alexander said:

“There is a real risk that efforts to eradicate global poverty will be undermined by the global financial and commodity price crises, threatening the progress made on meeting the UN’s Millennium Development Goals to make poverty history. The World Bank is forecasting that a sharp deceleration in the growth rate of developing countries - from 6% to 4% - could have a similar impact to a recession.

“We are right to focus on the impact of the economic crisis on our own countries but we cannot ignore the rights of every person on this planet to health, education, shelter and security. In this interdependent world, co-ordinated action from governments, the IMF and the World Bank is not only a moral imperative but in our self-interest.

“The UK supports the World Bank’s efforts to strengthen the capacity of developing countries to deal with these problems by offering a clear menu of options that help poor countries balance their short-term financial needs with long-term impacts. The Bank must use its strong financial base to provide additional resources as other sources of capital dry up. To meet the MDGs, investments in education, healthcare, and access to sanitation must be maintained.

“Earlier this year, World Bank Governors agreed with the UK and other countries that it must reform to be effective. I welcome its agreement to start this by increasing the voting power of developing countries, giving a third seat to Sub- Saharan Africa and agreeing to an open and transparent, competitive selection process for President.”

Notes to editors

1. The World Bank was set up in 1944 to provide funding and technical assistance for developing countries. International Development Secretary Douglas Alexander, DFID’s Permanent Secretary Minouche Shafik and Director General Martin Dinham joined representatives from over 180 countries in Washington DC over the weekend for the Bank’s AGM. For more info visit the World Bank website.
2. See more information on DFID’s work with the World Bank. See more information on the UK’s progress towards the MDGs. 
3. Last December, the UK gave over £2 billion to the World Bank’s International Development Association. This commitment followed agreement from the Bank to provide more funding and staff in fragile states, to increase its focus on climate change and to continue to improve and monitor its performance on conditionality.
4. Media queries only, please contact DFID press office 020 7023 0600 email pressoffice@dfid.gov.uk or call our Public enquiries point 0845 300 4100.


 

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