PSI blog on the Financial Crisis

Grandiose pledges lost in recrimination

The prognosis for sub-Saharan Africa this year is bleak. Foreign investment, which at $53bn overtook foreign aid to the continent in 2007, has slumped in 2009. Commodity prices – the principal driver of recent economic expansion in Africa – have fallen sharply.

Remittances, a lifeline for the poor as well as an increasingly important source of hard currency, are forecast by the World Bank to fall by nearly 5 per cent. Tourism receipts are also down.

The loss of momentum after one of the most promising bursts of growth in generations is palpable across Africa. For the first time in a decade, average income growth will be outstripped by population increases, raising the prospect that millions of Africans will be thrown back into poverty.

Italy, as host of this year’s G8 meeting, has dutifully put development at the heart of the agenda again. And Africa, as has become traditional, will be strongly represented.

But there is little optimism, among either activists from non-governmental organisations or the more pro-active G8 governments, that this year’s summit will distinguish itself as a noble milestone in the struggle to “make poverty history”.

Full text from the Financial Times, click here: http://www.ft.com/cms/s/0/5676104a-6af7-11de-861d-00144feabdc0,dwp_uuid=b9ceee98-6aa5-11de-ad04-00144feabdc0.html

Towards a Renewed Debt Crisis?

Risk Profiles of the poorest countries in the light of the global economic slowdown

The FES has just published a paper on the threat of a new debt crisis among low-income countries.

Much of the debate on the global financial and economic crisis has focused on the advanced industrialized economies, although it is now increasingly recognized that developing countries are severely affected by the crisis. Quite contrary to the supposed decoupling of the growth dynamic in developing countries from the global economic cycle, developing countries are affected by the current crisis via several transmission channels, such as a decline in exports, falling commodity prices, reduction in remittances, currency depreciations, reduced or even reversed capital inflows and investment as well as reduced availability of credit.

Jürgen Kaiser, Irene Knoke and Hartmut Kowsky argue in this paper that the shortcomings in multilateral debt control and relief mechanisms are amplified by the financial crisis. Thus, a new round of debt crises among Heavily Indebted Poor Countries (HIPCs) is most likely to occur.

They also provide a detailed debt default risk assessment for HIPC countries which - among other indicators - takes the effects of climate change into account.
The 68-page paper contains individual country profiles for 24 countries in Africa and Central & South America.

 The FES paper “Towards a Renewed Debt Crisis?” by Jürgen Kaiser, Irene Knoke and Hartmut Kowsky, DoG Occasional Paper N° 44, FES Berlin, June 2009, can be found here: http://library.fes.de/pdf-files/iez/global/06444.pdf

All publications from the Dialogue on Globalization series can be found here: http://www.fes-globalization.org/

Financial crisis can create social, political unrest, warns UN

Millions of people across the world are on the verge of plunging into poverty and unemployment, leading to social and political unrest, mainly in developing countries like India and Brazil, UN Secretary General Ban ki-Moon warned Tuesday in the Millennium Development Goal (MDG) report.

“We have made important progress in this effort (achieving the MDGs), and have many successes on which to build. But we have been moving too slowly to meet our goals, and today we face a global economic crisis whose full repercussions have yet to be felt. At the very least, it will throw us off course, particularly in developing countries,” Ban said in the forward to the report.

Full text here: http://www.sindhtoday.net/news/1/28081.htm

Crisis far from over: World Bank chief

World Bank President Robert Zoellick said on 30 June that financial markets are showing signs of stabilization, but warned that the global crisis was far from over in developing countries.
Speaking to reporters ahead of a meeting of finance ministers from Latin America, Zoellick said developing countries were only now feeling the full force of the global economic and financial crisis, which could quickly return to advanced economies where it began.

He said demand for World Bank financing was high and growing as credit markets remained shut to many developing market clients.

Full text here: http://finance.yahoo.com/news/Crisis-far-from-over-World-rb-3407469668.html?x=0&.v=2

World Financial Crisis and AIDS Backlash Threaten Lives

On the eve of the G8 Summit in Italy, the International Treatment Preparedness Coalition (ITPC) calls on leaders of the world's richest countries to announce significant additional funds to ensure that AIDS treatment and prevention programs for millions of men, women and children do not become a casualty of the economic down-turn.

"Cutting funds for HIV programs would be a clear disaster for the four million people already on treatment, the seven million people who need treatment and millions more who need effective HIV prevention programmes," said Aditi Sharma, coordinator of the Treatment Monitoring and Advocacy Project of ITPC. "We call on the G8 to commit their fair share towards meeting the Universal Access target -- a first step would be to plug the $5 billion funding gap for the Global Fund to Fight AIDS, TB and Malaria."

Reacting to a new report from UNAIDS and the World Bank(1), which found that the global economic crisis has already disrupted AIDS treatment programmes in eight countries and is expected to impact programs in an additional 21 countries by the end of this year, activists from around the world called on all governments to ensure sustained funding for HIV programmes and put in place early warning systems that alert them to impending drug stock-outs and treatment interruptions.

"Let us be completely clear about what this report is saying," said Gregg Gonsalves, co-founder of ITPC. "People living with HIV/AIDS, who are now receiving treatment, are in danger of losing their drugs because of cutbacks and funding reallocations. Many of those people will die. We cannot allow AIDS backlash or the current economic situation to be used as excuses for failing to meet commitments."

More here: http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/07-07-2009/0005056008&EDATE=

Global financial crisis dims Africa's economic outlook

The global financial crisis has adversely affected Africa's economy in many ways with demand for African exports falling, investment inflow deterring and government revenues sharply decreasing. As prospects for African economies have deteriorated, many African countries, fortunately, have improved macroeconomic management through reforms over the past few years which have helped them beat the crisis.

Click here for more: http://news.xinhuanet.com/english/2009-06/30/content_11627443.htm

Economic crisis imminently threatens economic survival of poor countries

Ahead of G-8 summit, United Nations Millennium Campaign warns that developing countries will be forced to slash desperately-needed expenditures for the poor; Campaign calls on G-8 leaders to urgently provide financial resources to poor countries

 

The United Nations Millennium Campaign is warning that the ongoing economic crisis is likely to bring the economies of many developing countries to the brink of collapse and threatens the very survival of their citizens. According to the African Development Bank, countries like the Democratic Republic of the Congo and Kenya could run out of foreign reserves to purchase goods necessary for survival in a matter of weeks. At the same time, countries including Laos, Senegal, Uganda, Cape Verde and Sudan are cutting expenditures on poverty alleviation for desperately poor citizens. Experts predict that spending on core development, including the Millennium Development Goals, could decline by $200 billion as a result of the crisis.

 

Read full text here: http://www.endpoverty2015.org/global-partnership/news/economic-crisis-imminently-threatens-economic-survival-poor-countries/06/jul/09

Nigeria’s Place in the Global Crisis

Foreign Minister Ojo Maduekwe was in Rome recently to make a case for the input of “Nigeria and the rest of the developing world” in the resolution of the current economic crisis. The minister reportedly gave a picture of the Nigeria’s desire as nations of the world, poor and rich alike, grapple with worst economic crisis since the Great depression. He put it like this: “a world which focuses on creation of a new global financial and economic order that would be built not only on the strengths of the developed countries, but also on the concerns of its partners across the divide.”

Maduekwe spoke at the G8 Development Ministerial Meeting where he rightly lamented that the economic interests of the developing countries are rendered marginal in the efforts to overcome the crisis globally. Intriguingly, the minister noted that while developed countries have put together stimulus packages to remedy the situations in their respective circumstances, nothing of such has been provided for the poorer countries.

More here: http://www.thisdayonline.com/nview.php?id=146306

Lingering food crisis in Africa to be examined at executive session of UNCTAD's Trade and Development Board

Overshadowed by global financial turmoil, food security remains a concern on continent; prices still high, and funds lacking for agricultural progress

The food crisis that preceded the global financial downturn has not disappeared from Africa, and must not be ignored as governments focus on world economic difficulties, the annual executive session of UNCTAD's Trade and Development Board heard from a series of experts on 30 June. More here: http://www.unctad.org/Templates/Page.asp?intItemID=4922&lang=1

Statement delivered by Vice President of the Republic of Zimbabwe to UN Conference

Statement made by Joice Mujuru, Vice President of the Republic of Zimbabwe, at the UN Conference on the World Financial and Economic Crisis and Its Impact on Development. The statement was delivered on June 24, 2009 in New York. Click here to access the full statement: http://www.talkzimbabwe.com/news/130/ARTICLE/4976/2009-06-29.html