Due to the expansion of the financial crisis, the World Bank will allocate additional funds to the private sector of developing countries, those that create jobs, bring economic recovery and growth, the bank announced after the G-20 summit.
Specifically, the International Bank for Reconstruction and Development will allocate $100 billion in loans over the next three years, and this year alone, compared to last year, it will nearly triple – from $13.5 billion to $35 billion. This money will protect the poorest and most vulnerable in the crisis, namely countries facing budget constraints, which therefore depend on IBRD funds that should help them recover their economies. At the same time, the World Bank has reduced its GDP growth forecasts for developing countries from the previous 6.4 percent to 4.5 percent in 2009, due to expected weaker exports and falling prices. G-20 leaders concluded on Saturday that the financial crisis must not break on the poorest, which is why Robert B. Zoellick, the head of the World Bank, proposed that all actions be global, coordinated, flexible, and swift.
The tightening of credit conditions and weaker economic growth will certainly affect lower budget revenues, which then means less money for education, healthcare, and infrastructure, which indirectly stimulates growth and development. Estimates show that every percentage point of growth less brings 20 million more poor people to developing countries. Already, about 100 million people have been impoverished due to rising food and energy prices. That is precisely why the World Bank is also increasing donations and interest-free loans for the 78 poorest countries (39 of which are in Africa).
