WORLD BANK IN WARNING ON SLOW PROGRESS ON POVERTY REDUCTION.
The World Bank has warned in a new report that many developing countries are at risk of not achieving poverty goals established by the international community, writes the BBC Online. In response, the Bank is urging both rich and poor nations to recommit themselves to halving the number of people living in poverty, defined as living on less than $1 a day.
"The study is not a final verdict on how countries will perform," said Shanta Devarajan, a World Bank economist. "But it is a warning that many are not on track to reach many of the goals."
Aside from reducing the numbers of poor, the UN Millennium Development Goals (MDGs) seek to reduce the child mortality rate, child-birth related deaths among women and the spread of HIV/Aids, among other things.
In releasing the latest study, the World Bank said while there had been progress in reducing poverty, it had been uneven, leaving too many regions and countries behind.
One example is sub-Saharan Africa, where life expectancy has fallen to 47 years from 50 since 1990 due in large part to HIV/Aids, which has boosted the infant-mortality rate. Four African nations still have life expectancies of only about 30 years.
Nations of the Pacific Rim are likely to reach the UN's Millennium Goals, whereas countries in the Middle East and North Africa have not been successful in achieving sustained growth in the past decade. Improvement in health care also remains an issue.
In South Asia, which includes populous India, the World Bank noted that while much progress had been made, malnutrition still remains a serious problem. Nearly half of all children under the age of five in the region are undernourished, the report said.
Problems also exist in Eastern Europe and Central Asia, where infant deaths and poverty are on the rise and school completion rates have fallen.
Reforma (Mexico) adds that the Latin America and Caribbean region has the potential to reach most of the MDG goals, with positive indicators in the majority of the categories, the most notable exception being with regards to child malnutrition.
Despite the ominous predictions, World Bank officials speaking to the press on Saturday expressed optimism that much can be done to alleviate poverty, writes BBC Online. Progress could be made through better governmental policies within countries and greater liberalization of trade between nations.
"The past decade has been a good one for opening up markets to goods from poor countries and a bad one for increasing foreign-aid flows," said Nicholas Stern, World Bank chief economist. "Monterrey showed that we have begun to turn the corner on aid," Stern said, referring to last month's UN conference in Mexico.
At the summit, world leaders called for increased development as a way to reduce poverty. It has been the theme IMF and World Bank officials have been promoting in recent weeks and months.
IMF Managing Director Horst Koehler has called "unconscionable" the subsidies rich nations, such as the US, Japan and those of Europe, give to their farmers and manufacturers.
>From Ghana's chocolate to Mauritania's camel cheese, trade barriers are
keeping poor countries' goods out of richer markets where subsidies swamp
the amount of money put aside for development aid, Reuters notes African
ministers also said yesterday. "What Africa needs at the moment is fair
trade - the aid is supplementary," said Ghanaian Economy and Finance
Minister Yaw Osafo-Maafo. "You cannot have adequate technology if you do
not have foreign trade."
And South African Finance Minister Trevor Manuel, who also chairs the World Bank's Development Committee, is quoted as saying, "I look at the amount of agricultural subsidies and the number of people employed in agriculture in the US and I say there's just no basis for that."
Meanwhile, El Mundo (Spain) reports that the World Bank and the EU yesterday found a common cause against the US administration's protectionism for its steel industry. "The protectionism of the US is diametrically opposite to our policies," World Bank President James Wolfensohn is quoted as saying. "With decisions like this, it is going to be very difficult to advance the cause of global responsibility."
AllAfrica.com and Agence-France Press also report.
G7 SEES RECOVERY, WOLFENSOHN SAYS POOR NEED SUSTAINED GROWTH. The G7 nations declared yesterday that the world economy was on the way back but the threat of high oil prices loomed and Argentina's crisis remained a deep concern, reports AFP. A joint communiqué by the G7 finance ministers made no reference, however, to recession in Japan, which had been cited by the IMF as one of the greatest menaces to the global outlook.
"The economic recovery from the slowdown is under way, supported by appropriate and proactive macroeconomic policies that were in part a response to the tragic events of September 11," G7 economic chiefs asserted. "But downside risks remain, including those arising from oil markets," said the finance ministers and central bank governors from Britain, Canada, France, Germany, Italy, Japan and the US.
The G7 statement, issued after a four-hour discussion in advance of the World Bank and IMF spring meetings, leaned towards optimism. Oil prices were an uncertainty, "but it hasn't prevented us from being optimistic about the prospects for the year ahead," British Chancellor of the Exchequer Gordon Brown said.
Although the recovery was ahead of schedule for much of the globe, the story notes that World Bank President James Wolfensohn said a strong, sustained pace of growth was needed for poor and developing nations. "Prospects vary considerably across the developing world. Some regions are still very much affected by negative economic effects of September 11," he told a gathering of IMF policymakers. "The situation in Africa remains alarming. The deep decline of commodity prices, reduced tourism revenues and workers' remittances have opened new financing gaps. We will not meet our objectives for reducing global poverty without economic growth that is both sustained and more evenly distributed."
Reuters notes that one major source of cash for poor countries is the Bank's lowest-cost funding arm, the International Development Association (IDA). Rich country donors are locked in a debate which is delaying a deal on a Bank request for an extra $12.5 billion for the fund which partly finances the Heavily Indebted Poor Countries debt relief initiative (HIPC). The US has said it would like to increase the amount of funds from IDA through grants instead of loans, while Europe has given the idea a frosty reception and even developing countries now seem against it.
On Friday, the G24 group of developing countries said it was not in the long-term interest of low income countries because it threatens the future of the fund altogether. IDA is financed by repayments from loans, so critics argue that giving the money out would chip away at the cash pool. This might be the case particularly if countries like the US, which traditionally have difficulties getting foreign aid budgets approved by Congress, cannot come up with new funding pledges in the future.
South African Finance Minister Trevor Manuel appeared to agree with those critics. He pointed out the Meltzer report, commissioned by members of Congress after the Asian financial crisis and carried out by an economist with close ties to the Bush administration, Alan Meltzer, "was quite intent on shutting down the Bank". "And I don't think that's in the interest of developing countries," he said.
The New York Times and the Washington Post also report, noting that policymakers remained divided on issues including the IDA issue. "We're not quite at a final conclusion point, but we're in agreement that certain categories of aid should be in the form of grants," US Treasury Secretary Paul O'Neill is quoted as saying.