World Bank Chief Economist Justin Lin has called for the creation of a US$2-trillion "global recovery fund", but many economists are skeptical about the feasibility of such an ambitious plan.

Lin proposed on Monday that wealthy nations, led by the United States and Europe, and countries with high foreign exchange reserves, such as China and the oil-exporters, commit 1 percent of their economic output for five years to set up the fund, which would be used to stimulate the economic development of poor nations.

With the fund's help, many underdeveloped countries would escape poverty, grow in a sustainable way and import more from developed countries, Lin was quoted as saying. He also hoped the proposal would be discussed at the G20 summit in April.

Although it would be helpful to rebalance the global economy in the long run, analysts believe the proposal is unlikely to be considered seriously at a time when countries from the US to China are pulling out all stops to fight their own economic problems.

"Holding hefty foreign exchange reserves does not mean the holder's economy is in good shape," said Lian Ping, chief economist with the Bank of Communications.

"The reserve-rich nations in East Asia, such as Japan and China, are grappling with their own economic challenges as the global financial crisis worsens, so they may not be capable of giving a helping hand to other nations," he said.

The ongoing global financial crisis has taken a toll on the Chinese economy, with the country's GDP growth slumping to 9 percent year-on-year last year, snapping a five-year streak of double-digit growth.

"It would be very hard for countries in different regions to reach a consensus on how to build up the fund and put it into use, as they have different backgrounds and interests on the issue," said Zhao Xijun, finance professor with China Renmin University.

Lian said that the setting up such a fund on a global scale is different from regional cooperation, as the interests of countries in the same region are closely intertwined.

Besides, economists said there are doubts in the international community about whether the international organizations could play a significant role in properly managing the proposed fund to tackle global crises and promote development.

"They should reform its management mechanism to make their representation more diversified so that people can pick up their confidence in them," Zhao said.

(China Daily February 12, 2009)