13 November 2008

Rwanda: Global Financial Crisis - World Bank Extends $100 Billion to Poor Nations

Kigali — In order to protect the world's poor nations from the troubles of the global financial crisis, World Bank Group has announced financial support to the tune of $100 billion.

According to the statement from the bank, the fund will support developing countries facing big budget short-falls, and help sustain long-term investments upon which recovery and long-term development will depend.

The support for the next three years will see the bank's lending triple to more than $35 billion compared to $13.5 billion last year.

Making the announcements ahead of a G20 summit, the World Bank Group said the support could be through its International Bank for Reconstruction and Development.

The fund will include the launch or expansion of four facilities for the crisis-hit private sector that is critical to employment, recovery and growth.

It comes at a time the bank lowered its growth forecast for developing economies to 4.5 percent in 2009, lower than the previous projection of 6.4 percent, due to a combination of financial turmoil, slower exports and weaker commodity prices.

World Bank expects large economies to contract by 0.1 percent next year while the world economy ekes out only one percent growth.

"As always, it is the poorest and most vulnerable who are the hardest hit," said World Bank Group President Robert B. Zoellick.

Zoellick said that the response to this crisis must be global, coordinated, flexible and fast, while the challenges need to be addressed at the country level, it is more critical than ever that the international community acts in a coordinated and supportive way to make each country's task easier.

"Current estimates suggest that a one percent decline in developing country growth rates pushes an additional 20 million people into poverty. Already 100 million people have been driven into poverty as a result of high food and fuel prices," the satement reads in part.

John Rwangombwa, Rwanda's Permanent Secretary in the Ministry of Finance and Economic Planning said that since it is a stand-by fund, Rwnda would nly apply if it is affected.

"We are not a benefeciary as of yet, because we are not affected by the crisis," he said on phone yestday.

Rwanda is not yet affected by the global financial turmoil but government official have said that if the crisis persisits, in the long run, the economy will be affected.

Last month the giovernment of Rwanda set up a committee to monitor international financial trends and assess the actual and possible impact of the financial turmoil on Rwanda on a monthly basis.

Apart from expanded lending, the World Bank Group is also working to speed up grants and long-term, interest-free loans to the world's 78 poorest countries, 39 of which are in Africa.

Last year donors pledged $42 billion for the International Development Association, the World Bank's fund for these countries.

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