Financial crisis hits global poverty battle

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The Independent Online

Efforts to eradicate global poverty have come under threat as governments grapple with the financial crisis, international development secretary Douglas Alexander said.

Mr Alexander warned there was a risk developing countries could be forgotten amid the turmoil on the money markets.

Speaking at the World Bank's annual general meeting yesterday, Mr Alexander said the effects of the credit crunch were starting to ripple through emerging economies and slow economic growth.

He urged governments and the International Monetary Fund and the World Bank to act together to help developing countries cope with the twin shocks of the financial crisis and high food and energy prices.

The World Bank has identified 28 countries vulnerable to hikes in food and fuel costs and estimates 44 million more people will suffer from malnutrition as a result.

Mr Alexander said: "There is a real risk that efforts to eradicate global poverty will be undermined by the global financial and commodity price crises, threatening the progress made on meeting the UN's Millennium Development Goals to make poverty history.

"The World Bank is forecasting that a sharp deceleration in the growth rate of developing countries - from 6 per cent to 4 per cent - could have a similar impact to a recession.

"We are right to focus on the impact of the economic crisis on our own countries but we cannot ignore the rights of every person on this planet to health, education, shelter and security."

He added: "In this interdependent world, co-ordinated action from governments, the IMF and the World Bank is not only a moral imperative but in our self-interest."

Mr Alexander said despite the financial crisis, investment in education, health care and sanitation must be kept up to ensure the Millennium Development Goals (MDGs) are met.

And he urged the World Bank to "use its strong financial base to provide additional resources as other sources of capital dry up".

The World Bank has set up a $1.2bn programme and a new energy initiative for the poor in response to food and fuel price increases.

It also agreed to give poor countries more say on how it is run by allowing sub-Saharan African nations a third seat on its governing board and selecting the bank's next president through a transparent and competitive process.

Mr Alexander said: "Earlier this year, World Bank Governors agreed with the UK and other countries that it must reform to be effective. I welcome its agreement to start this by increasing the voting power of developing countries, giving a third seat to Sub-Saharan Africa and agreeing to an open and transparent, competitive selection process for president."