WASHINGTON, November 29 – The World Bank on Saturday urged industrialised nations to maintain aid flows to developing nations to offset an expected decline in private capital flows to emerging markets due to the credit crisis.
"Over the past year, many developing countries have already had to cope with high food and fuel prices, and are now faced with a third problem of unprecedented proportions," said Justin Lin, the World Bank chief economist and head of delegation in a speech prepared for the United Nations International Conference on Financing for Development in Doha.
"While the channels of transmission may differ, virtually no developing country – whether an emerging market or a poor country in Africa – has escaped the impact of the widening financial crisis."
High-level delegates including heads of state were gathering in Doha for the UN-sponsored conference seeking ways to limit the impact of the financial crisis on developing countries.
Developed countries have so far committed to pay less than $20 billion a year of the $50 billion in additional aid which they agreed in 2004 to donate by 2010, UN figures show.
The new money leaves total annual development aid far short of the $130 billion a year targeted for 2010 by the UN\’s Millennium Development Goals.
According to World Bank estimates, net private capital flows to developing countries could drop from about one trillion dollars in 2007 to roughly half that level in 2009.
Lin said, "Lessons from earlier crises point to the importance of safeguarding investment in long-term growth and development."
The economist added: "It is critical that aid flows be maintained, past commitments be honoured and supplemented, and aid effectiveness be improved. At about 100 billion dollars a year, total official development assistance is modest compared with what is being spent to tackle the financial crisis in developed countries."