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WB, IMF: Developing Countries Could Suffer Serious Consequences of Financial Crisis

The World Bank and the International Monetary Fund (IMF) warned on Sunday that developing countries could suffer serious consequences of financial crisis.

"Developing and transition countries (DTCs) could suffer serious consequences from any prolonged tightening of credit or sustained global slowdown," said a communique released after the meeting of the Development Committee of the Bank and the IMF.

"We are concerned by the impact of the turmoil in world financial markets and the continued high prices of fuel and food," said the communique. "We welcomed member countries' commitment to take comprehensive and cooperative measures to restore financial stability and the orderly functioning of credit markets."

The World Bank Group (WBG) and the IMF must help address these critical challenges, in particular the impact on developing countries, and draw lessons from the current crises, said the communique.

"It will be crucial to maintain a focus on support for sustainable growth, poverty reduction, and the achievement of the Millennium Development Goals (MDGs)," it added.

World Bank President Robert Zoellick said after the meeting that the World Bank will help developing countries strengthen their economies, bolster their financial systems and protect the poor against the financial turmoil in international markets.

"Developing countries, many of them already hit hard by high prices for energy and essential foodstuffs, risk very serious setbacks to their efforts to improve the lives of their populations from any prolonged tightening of credit or a sustained global slowdown," Zoellick told a press conference.

"The poorest and most vulnerable groups risk the most serious --and in some cases permanent -- damage. 100 million people have already been driven into poverty this year and that number will grow," he warned.

The World Bank has recently announced US$1.2 billion rapid financing facility is providing immediate help for countries coping with the impact of high food prices on the poor and already has 850 million dollars approved or in the pipeline, said the World Bank chief.

"We urge countries to consider making contributions to this fund. Australia has recently contributed 50 million Australian dollars, but we need more," he said.

IMF Managing Director Dominique Strauss-Kahn also told the news conference that the world should not forget the other crisis, referring to the crisis of rising food and energy prices in poor countries.

Strauss-Kahn hailed the eurozone's action plan to cope with the financial crisis. He also urged the US government to implement a US$700 billion bailout plan immediately to stabilize the financial markets.

(Xinhua News Agency October 13, 2008)

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