Obama Seeks $100B More for IMF
FrontLines - May 2009
By John Waggoner
World leaders pledged April
2 at the G-20 world economic
summit in London to assist poor
nations by adding $1 trillion to
the International Monetary
Fund—including $100 billion
from the United States.
“The challenge is clear,”
President Barack Obama said.
“The global economy is contracting.
Trade is shrinking.
Unemployment is rising. The international financial system is
nearly frozen.”
The Obama administration
will ask Congress to add $100
billion to the IMF for poor
nations struggling under the
global economic downturn—
nearly doubling the current U.S.
commitment—Treasury
Secretary Timothy Geithner said.
The funds will go through
the Treasury Department.
The U.S. move takes place
as the IMF and the World Bank
reported in March that the
financial meltdown that began
in the richest nations at the end
of 2008 had spread to medium
income developing countries in
early 2009.
The World Bank reported that
94 out of 116 developing countries
are now experiencing economic
slowdowns.
IMF Managing Director
Dominique Strauss-Kahn said
the world is witnessing “a third
wave” of a crisis that is now
“hitting the world’s poorest,
most vulnerable countries.”
According to the Bank, the
global economy will shrink this
year for the first time since
World War II and will push
approximately 46 million more
people in the developing world
into poverty. Their plight has
been called a “crisis within a
crisis,” and imperils the gains
the developing world achieved
over the last two decades. The
crisis also raises the prospect of
widespread political unrest.
According to an IMF study,
about half of the nations it
defines as “highly vulnerable”
are in sub-Saharan Africa. This
comes even though the region
would seem the farthest removed
from the global financial
meltdown.
The U.S. and European recession
reached poor countries primarily
through decreases in
trade, foreign direct investment,
and remittances—the same vehicles
that drove growth in the
developing world when the
world’s economy was flush and
expanding.
Investment in the developing
world is expected to contract
sharply, with projections showing
a 20 percent decline between
2008 and 2009. This compares
to the 10 percent or more growth
that was estimated a year ago
before the crisis hit.
Since the 1990s, developing
countries have become increasingly
dependent on remittances,
which the World Bank estimates
have increased at double digit
rates during that period.
Remittances were flat in
the second half of 2008 at the
onset of the crisis and are
expected to be even smaller in
2009 as migrants to the wealthy
nations find it harder to earn the
money they had been sending
back home.
★
FrontLines is published
by the Bureau for Legislative and Public Affairs
U.S. Agency for International Development
To have FrontLines delivered
to you via postal mail, please subscribe.
Material should be submitted
by mail to Editor, FrontLines, USAID,
RRB, Suite 6.10, Washington, DC 20523-6100;
by FAX to 202-216-3035; or by e-mail to frontlines@usaid.gov
To view PDF files, download
the Adobe
Acrobat Reader.
Back to Top ^
|
