Friday, April 24, 2009

Zoellick Said "As the Recession Deepens"

World Bank President Robert Zoellick spoke to the global recession in WBG/IMF Opening Press Conference for the 2009 Spring meetings. He said:

We have more work to do, and will need more resources, to deal with a broader set of problems in developing countries where real economies are being hit by the second and third waves.

First and foremost, we need to ensure that we don't repeat the mistakes of the past. When financial crises hit Latin America in the 1980s and Asia in the 1990s, the debate about numbers silenced a debate about people. Basic health, nutrition, and education budgets were cut back severely. We saw social unrest, deprivation, and even violence. Poor people suffered most from the mistakes of others.

We need to be ever-vigilant, whether it is financing, instruments, or policy prescriptions, that we deliver on our commitments and are held accountable for doing so. As the recession deepens, leaders will be under pressure to protect home markets. Such retreats behind barriers will only make the economic crisis worse.

Second and third waves? It sounds like an indiscriminate tsunami. Mistakes of others? Said more directly, poor people suffered from loan conditions imposed by the IMF.

Bob Zoellick clearly stated a deepening global recession. What happened to green shoots? The IMF will be awash in green as G20 nations boost its coffers by $500 billion. It targeted $250 billion in Strategic Drawing Rights for countries needing to stabilize their currency. Things are moving fast and furious on the international front. Two groups benefit from the global revamp, the aforementioned IMF/World Bank and the Financial Stability Board (FSB). Until April 2009 the FSB was known as the Financial Stability Forum. In an April 2 press release on their new name, the FSB stated:

14. The FSB and IMF will intensify their collaboration, each complementing the other’s role as per the 13 November 2008 letter by the Managing Director of the IMF and the Chair of the FSF. The FSB and the IMF will collaborate in conducting Early Warning Exercises and make a joint presentation to the IMFC on financial risks and vulnerabilities and policy recommendations to mitigate such risks and vulnerabilities.
There is more work to do by the two benefactors of global financial crisis. They meet this weekend alongside the G20.