World finance ministers focus on aid to poor nations reeling from economic crisis

Poor nations draw attention at finance meeting

WASHINGTON — Reeling from a recession with roots in rich countries, the world’s poorest nations need a hand up without burdening them with debt or adding to the ranks of the impoverished, global finance officials said Sunday.

Poor countries have watched their economies plummet as the recession’s effects spread, drying up investment capital, sharply reducing exports and commodity prices, and slowing the flow of cash sent home by their citizens working abroad.

“We meet at an unprecedented time when a severe global economic slowdown threatens to reverse major progress in poverty reduction,” Treasury Secretary Timothy Geithner said on the final day of the World Bank and International Monetary Fund’s spring meeting.

After focusing on the crisis in industrialized nations, finance ministers shifted attention to helping poor countries.

The crisis is “advancing like a silent tsunami, with those who contributed least to the crisis suffering most from its impact,” said the German development minister, Heidemarie Wieczorek-Zeul. She said it would take more money to help stabilize poor nations “without plunging them into a spiral of debt.”

Naoyuki Shinohara, Japan’s vice finance minister, said developing countries are suffering a “disastrous slump” in private capital investment, a main economic driver.

Geithner said development banks are at the forefront of international efforts to lift more people out of poverty. “We cannot afford to lose time or lose ground,” he said.

Rich nations need to provide enough assistance, he said. Also, it is important that institutions led by the Washington-based World Bank conduct their aid business more in the open, Geithner said.

The World Bank pledged to provide poor countries with more than $55 billion for public work projects left in limbo when the recession dried up capital investment. That follows a tripling in lending, to $12 billion, to support health, education and other safety net programs in poor countries.

The IMF’s board has agreed to double the borrowing limits for 78 of the poorest countries in an effort to meet the needs of developing nations harmed by the downturn.

There are signs that the world economy is stabilizing. but finance officials attending the meetings said it will take until the middle of next year for the world to emerge from the worst recession in decades. They said stimulus packages, bank recapitalization and other actions taken by governments and central banks to deal with the crisis are beginning to show results.

On Saturday, the finance ministers tried to hammer out details of the $1.1 trillion plan that President Barack Obama and his Group of 20 counterparts announced at their recent summit in London.

There was much talk about how to come up with the fresh $500 billion infusion of money that the G-20 pledged to the IMF at the summit. More than $300 billion is already pledged by the U.S., the European Union, Japan, Canada, Switzerland and Norway. It remains unclear what countries will open their wallets wider — or at all.

To make up the shortage, the IMF agreed this weekend to sell bonds — a first in its 65 years — to emerging economies such as China, Brazil and India. Those nations have said they want a greater voice at the IMF before they will pony up additional resources.

The bonds would help reach the goal announced at the G-20 in London, but the notes will provide shorter-term financing than the pledges already made by the U.S., EU, Japan and other nations.

Associated Press writer Harry Dunphy contributed to this report.