Global financial officials, in understanding the need to fund underdeveloped and developing countries have been positive in responding to their needs and at the same time have clearly conveyed that they too require the support of the developed countries since it is only through their support that the required funds can be generated. The management of the World Bank and the International Monetary Fund has cautioned that the financial crisis is not yet over and have felt the need to increase the quantum of loans provided by them to poor countries. However, in meeting these commitments officials of these institutions continue to seek commitments from developed countries in raising a minimum of $1.1 trillion which is the minimum funding required in relieving these countries of the financial burdens. Robert B Zoellick, the president of the World Bank announced that the bank would provide over the next three years at least $45 billion for the development of infrastructure projects in developing countries. The bank has also collaborated with the Inter-American Development Bank to provide loans up to $90 billion to Latin American and Caribbean countries during the next two years. Mr. Zoellick believes that developing countries are the most adversely impacted by the financial crisis.
As informed by Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), the $500 billion set aside by leaders of the Group of 20, has not yet been disbursed to developing countries. The IMF intends to start its activities in this regard by the end of the year. The United States continues to differ from European countries in regard to the efforts that need to be made in getting over the financial crisis. The US believes that more efforts are required to be made in stimulating world economies and increasing economic activities, while countries such as Germany have conveyed that they have already made their best efforts.
The ongoing debate has been somewhat calm during the past few days. According to Mr. Strauss Kahn, the total outlay required for such purposes in stimulating the world economies is about 2% of the world economic output, and the stimulus plans announced so far were in keeping with the recommendations of the International Monetary Fund. In this regard finance ministers from the Group of 7 countries will meet shortly, after which there will be a meeting of ministers from the Group of 20 which includes countries such as Russia, Brazil, India, and China. The International Monetary Fund and the World Bank will also have their yearly spring meetings during the weekend. The major issue to be considered will be to ascertain if finance ministers will be able to achieve the goal of mobilizing funds up to $500 billion for the two financial institutions.
So far $300 billion have been pledged by the USA, Japan, and the European countries, while China has pledged $40 billion. However, there is still a shortfall of over $100 billion in meeting the targeted amount and officials of the two financial institutions are making hectic efforts to get further commitments from developed and industrialized countries. The success of these efforts, they believe will be a true measure to test the effectiveness of international collaborations. According to Arvind Subramanian, who is a senior fellow with the Peterson Institute for International Economics in Washington, it is crucial to get commitments that total $500 billion, failing which the desired outcomes cannot be achieved.
References
EDMUND L. ANDREWS, Global Finance Officials Promise More Help, but Seek It, Too, New York Times, Web.