World Bank chief cites India, China to promote globalisation

By Arun Kumar, IANS,

Washington : Citing the examples of India, China and Brazil, World Bank Group President Robert B. Zoellick has stressed the need for inclusive and sustainable globalisation to move people out of poverty and for growth.

Support TwoCircles

“I’ve felt in the past and continue to feel that globalisation offers tremendous benefits. If you look at countries that have been able to move people out of poverty, grow, offer new opportunities, the benefits are enormous,” he told reporters here Wednesday.

“And I’ve visited, you know, those countries from China to Africa, from Brazil to India, and talked to younger people who feel that this offers tremendous opening of doors for them,” Zoellick said at his briefing ahead of the International Monetary Fund (IMF)-World Bank meetings over the weekend.

Indian Finance Minister P. Chidambaram, arriving here Friday for the annual meetings, will also exchange notes with counterparts from developed and developing countries besides taking part in the Group of Twenty meeting at the US Treasury Department Saturday.

Turning to the global economic crisis, Zoellick said the events of September could be a tipping point for many developing countries as a drop in exports will trigger a fall-off in investments.

“Deteriorating financial conditions combined with monetary tightening will trigger business failures and possibly banking emergencies. Some countries will slip toward balance-of-payments crises,” Zoellick warned.

He noted that the World Bank was tentatively forecasting that the growth rate of developing countries could decline from 6.6 percent next year, as forecast in April, to closer to four percent.

But he said with the rising economic powers, the G7 advanced countries can work through this crisis by dealing with bad assets, recapitalising banks, and providing much needed liquidity. “They need to work together to fix the financial, regulatory, and supervisory system that failed”.

“We also need the G7 and the rising economic stakeholders to help those that are most vulnerable, weaker developing countries slipping toward the edge, and the poorest people with no cushion to sustain in times of trial,” he said.

In reply to a question about sovereign wealth funds, Zoellick recalled his “one percent solution” at the spring meeting of the group.

It was, he said, “a way of just highlighting that if we could take one percent of the $3 trillion in sovereign wealth funds and channel it into African equity, you’d have $30 billion”.

The question is “how can we channel opportunity and investment into Sub-Saharan Africa so that 15 years from now they’re a pole of growth just as China and India are a pole of growth”?

Meanwhile, the IMF and Financial Stability Forum (FSF) held a high-level meeting here on the financial turmoil and policy responses to promote discussion and interaction with senior officials from central banks, finance ministries and financial supervisory and regulatory agencies from a large group of advanced and emerging market economies.

“Since the onset of the turmoil, there have been extraordinary liquidity and solvency strains in the financial system,” said John Lipsky, the IMF’s first deputy managing director.

“The IMF will continue to work closely with the FSF and emerging market countries to address the most urgent risks and help strengthen crisis preparedness across our membership, and, over the longer term, help build stronger macro-financial frameworks,” he said.

Mario Draghi, governor of the Bank of Italy and chairman of the FSF, said interactions with emerging market economies “are important to develop robust arrangements for dealing with stress in the financial system”.

“We will intensify our cooperation with the IMF and G20 in building a multilateral approach to systemic reform,” he said.

The high-level meeting included officials from India and 25 other countries besides representatives from several international financial institutions.