World Bank says 89 million people head for extreme poverty by 2010

LAGOS (Xinhua) – The World Bank says low-income countries will remain under the shadow of the global financial crisis for a long period, estimating cases of extreme poverty to rise in 2010, the News Agency of Nigeria reported on Wednesday.

In a paper prepared for the upcoming G-20 meeting in Pittsburgh, US, the World Bank said as a result of the crisis, 89 million additional people will live in extreme poverty, on less than $1.25 a day, by the end of 2010.

The paper was published on the web site of the World Bank on Tuesday ahead of the G-20 meeting, which holds between Thursday and Saturday.

The global financial crisis was triggered by sub-prime mortgage facilities in the US, with the collapse of its top financial institutions such as the Lehman Brothers in 2008, sending ripples across the world economy.

“The global recession has also put at risk 11.6 billion US dollars of core spending in areas such as education, health, infrastructure and social protection in the most vulnerable countries,” said the World Bank.

The paper added that the global economy has shown tentative signs of recovery, but 43 low-income developing countries are still suffering the consequences of the global recession, but the countries are not listed.

According to the paper, the economic conditions of the low-income countries highlight the need to increase support to the poorest countries dealing with economic volatility and crisis.

The paper recommends a coordinated policy action by the G-20 in agriculture, small and medium-sized enterprises (SMEs) and a crisis response facility.

“The G-20 should endorse the pledge of 20 billion dollars at the G-8 summit in L’Aquila, Italy, for agricultural development, with firm details on how country commitments will be met,” the paper said.

“Delivery will be operationalized with national ownership, and results and effectiveness will be assessed,” it said.

“SMEs are critical to the resumption of growth in low-income countries, and the G-20 should actively support scaled up efforts to expand finance for SMEs,” it added.

“The World Bank Group plans to double its mobilization of finance for SMEs by 2013 to 15.5 billion dollars,” the paper said.

On the crisis response facility, the paper added that the current crisis highlights the pressing need for a quick and effective assistance that can be provided to low-income countries following shocks.

“Failure to address this need could jeopardize the progress achieved in many poor countries based on recent strong reform efforts, and instead lead to costly reversals,” it said.

“Since the onset of the food and fuel crises nearly two years ago and the subsequent financial crisis and global recession, donors and development agencies have mobilized significant additional resources for low-income countries,” it added.

“However, low-income developing countries have been hit hard by crises not of their making, and face daunting challenges that jeopardize years of progress in combating poverty,” the paper said.

According to the paper, several economic shocks resulting from the financial crisis are taking a severe toll on the poorest countries in areas of trade, private capital inflows, remittances and tourism.