WASHINGTON // The world's poorest countries struggled harder than usual to make their voices heard toay as the industrialised West focused on its own recent plunge into the financial abyss at the annual meeting of the 185-nation IMF and World Bank. The meeting in Washington was gripped by a sense of emergency after record stock market plunges last week were sparked by the bursting of credit and property bubbles in the US.
Developing countries likely to suffer the most lasting setbacks from the financial crisis watched as western countries pulled together multibillion-dollar packages to prop up their banks, but failed to deliver on repeated aid promises. "We've seen the interventions by the governments of advanced economies and we all know we don't have that capacity in Africa," said David Carew, the finance minister of Sierra Leone, who expected the financial crisis would cause "ripple effects later this year or early next year".
At a sparsely attended press conference on Sunday, Mr Carew and Ali Lamine Zeine, the finance minister of Niger, said they expected to be hit by lower aid, drops in remittances, falls in private capital flows and reduced access to bonds and credit lines. Far more bankers and officials were to be found at a reception hosted by Euromoney magazine at the swanky Willard Hotel, where Mexico's Guillermo Ortiz was given the Central Banker of the Year award. Many European officials were absent because of an emergency summit called in Paris to discuss a banking bailout.
"This is a man-made catastrophe," said Robert Zoellick, president of the World Bank, at a news conference after a development committee meeting of IMF and World Bank member countries. "The actions and responses to overcome it lie in all our hands." In a communique, the development committee called on the IMF and World Bank to do all it could to help developing countries through the crisis. "The poorest and most vulnerable groups risk the most serious - and in some cases permanent - damage," the committee said.
Dominique Strauss-Kahn, the IMF managing director, said the fund could draw on US$200 billion (Dh734.6bn) to make loans. A lack of lending in recent years has boosted the organisation's coffers, while countries such as Argentina have also repaid the IMF their loans. Meanwhile, the International Finance Corp, the World Bank's private sector lender, said it planned a $3bn fund to help small banks in poor countries. The World Bank named 28 countries facing financial strain.
Louis Michel, the EU's aid chief, was particularly outspoken. "The credibility of the donor community as a reliable partner is clearly at stake," he said. "This is already self-evident when the fledgling pace with which aid for the poorest is increased is compared with the speed with which aid for the richest is mobilised." But Mr Strauss-Kahn sounded a more optimistic note when he said western leaders' efforts to support banks and calm the markets co-ordinated in Washington and Paris this weekend would eventually bear fruit. "I don't think there's a reason... to fear," he said. "The political determination is total."
The major stock exchanges in New York followed Europe and Asia yesterday in opening strongly following the government efforts to reassure investors. In a closing speech to the IMF board yesterday, Mr Strauss-Kahn said the IMF was well placed to co-ordinate global financial action as it did with a set of principles governing the activities of sovereign wealth funds adopted by the IMF on Saturday. "With our universal membership and demonstrated financial diplomacy - for example our work this year on sovereign wealth funds - we can bring together the different actors to discus the risks to global stability and policy responses," he said.
Whether politicians, particularly in the West, will grant the IMF sufficient clout to assume greater financial leadership remains to be seen. Trevor Manuel, the South African finance minister, echoed many other officials in urging updated financial architecture to deal with future disasters, accusing the IMF of appearing "remote" during this crisis. "If you ask me for my view about the problems we're seeing right now, it's the absence of strong, visible leadership capable of driving change and co-ordinated responses to market burn-down," he said.
sdevi@thenational.ae