Credit crisis should not hurt poor, ministers urge

Major economies should not use the global credit crunch as an excuse to renege on aid promises to poor countries whose problems may worsen due to the crisis that began in the West, world finance leaders and development officials said on Sunday.

During weekend meetings of the World Bank and International Monetary Fund in Washington, African finance ministers pointed to the speed with which the U.S. and Europe have raised billions of dollars for faltering banks but are behind in aid commitments to poor countries.

Higher food and fuel prices have added to the budget burdens of poor countries. The World Bank has created a watch list of 28 countries facing financial strains, which spans from Jordan, Lebanon, Cambodia, Sri Lanka to Jamaica, Haiti, Ethiopia, Rwanda, Malawi, Nepal, Fiji and Ivory Coast.

European Union officials also worry.

"The credibility of the donor community as a reliable partner is clearly at stake," Louis Michel, the European Union's aid chief, told the IMF and World Bank development committee.

"This is already self-evident when the fledgling pace with which aid for the poorest is increased is compared with the speed with which aid for the richest is mobilized," he added.

U.S. Treasury Secretary Henry Paulson urged the World Bank and IMF to make every effort to ease the impact of the financial crisis on poorer countries because he said they ultimately will be affected.

"Financial market developments are having an acute impact on advanced countries, and we can expect the crisis to have major ramifications for emerging markets and the poorest countries as well," he said.

Developed countries promised to double aid to Africa by 2010 at a leaders' summit in 2008, but have failed to make good on the pledges. Strains on poorer countries have become especially acute as prices for food and fuel have risen sharply.

Although the prices have receded somewhat, they remain high in historical terms and are likely to stay volatile. As of end-September, oil prices have declined around 45 percent with respect to their mid-July peaks, but are still almost double the levels recorded at end-2006, the IMF said.

Rising food prices have caused 75 million more people to go hungry, the Food and Agriculture Organization said. Similarly, the World Bank has said food price increases may swell the ranks of the world's poor by 100 million people. Nearly one-third of the newly poor are in Africa, the region most severely affected by the current rise in prices.