The global economic crisis threatens to reverse gains in fighting poverty, so banks that provide aid to poor nations must embrace changes in their operations, Treasury Secretary Timothy Geithner said Sunday.
Those development banks are at the forefront of efforts to eradicate poverty and promote sustainable growth, he said the World Bank’s policy-setting board.
“We cannot afford to lose time or lose ground,” Geithner said.
At the same time, he said it was important for the banks to conduct their aid business in the open.
They must face reviews to ensure they have enough money and are promoting fundamental changes, Geithner said. He added that their resources must be used to “achieve the maximum impact on long-term development objectives, including addressing the needs of the poorest.”
As the weekend meetings of the bank and the International Monetary Fund wrapped up, finance ministers said they are seeing signs the economy is stabilizing. But they said it will take until the middle of next year for the world to emerge from the worst recession in decades.
“We can see a break in the clouds,” Egyptian Finance Minister Youssef Boutros-Ghali, the chairman of the IMF’s policy-steering committee, said Saturday.
He said some financial markets are trending up and other economic indicators are improving “but there are still downside risks.”
Last week, the IMF said the global economy is likely to shrink by 1.3 percent this year, the first such decline in six decades.
Officials agreed on an immediate increase of $250 billion for IMF lending. A further $250 billion would be added later to an “expanded and more flexible” line of credit.
President Barack Obama is seeking congressional approval for up to $100 billion for that effort, matching commitments for the same amount made by Japan and the European Union.
In a victory for emerging economic powerhouses such as China and Brazil, the IMF will sell bonds to raise funds to lend to struggling nations. The emerging economies pushed for the move as an alternative to providing longer-term loans to the IMF.
The IMF has never issued bonds before, although the idea was explored in the 1980s. Both the bonds and loans would require the IMF to pay interest.
Copyright 2009 The Associated Press