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Zoellick stresses need to recapitalize banks in poor nations+(Japan Economic Newswire Via Acquire Media NewsEdge) WASHINGTON, Oct. 12_(Kyodo) _ World Bank President Robert Zoellick on Sunday stressed the importance of recapitalizing banks in developing countries that will likely suffer losses from the current global financial turmoil. "We've already started to see distress with some developing countries' financial institutions...Some of the small banks could be under stress, take losses and need recapitalization," Zoellick told a press conference after a one-day meeting of a joint panel of the bank and the International Monetary Fund. He said the International Finance Corp., a member of the World Bank Group which invests in the private sector in developing countries, is exploring the possibility of setting up a fund to help recapitalize banks in poor nations. The World Bank chief said many developing countries have been hit hard by high energy and food prices and they risk "serious setbacks" to their efforts to improve the lives of the poor due to the worldwide credit crunch and economic slowdown. Zoellick called on developed countries not to scale back their overseas aid due to the credit crisis. "Aid flows must be maintained," he said. In a statement, the IMF-World Bank Joint Development Committee urged the bank to join the fund "in drawing on the full range of its resources -- finance, analysis and advice -- to help developing countries strengthen their economies, maintain growth and protect the most vulnerable groups against the impact of the current crises." The 24-member panel also urged the IFC to "explore options for helping recapitalize banks in developing countries adversely affected by the global liquidity crisis, including the possibility of a fund." During the committee meeting, Japan pledged to provide a total of $150 million over the next five years to help African nations raise their farm productivity and to assist developing economies in tackling natural disasters induced by climate change. Naoyuki Shinohara, Japan's vice finance minister for international affairs, said in his speech that the aid will be offered to developing nations through a trust fund set up at the bank. "While having fallen back from their peaks, food prices are still hovering at a high level and are expected to continuously cause serious damage to the poor in developing countries," he said. Shinohara said a fundamental remedy for the high food prices in developing countries "would inevitably require improving agricultural productivity." He also pointed out that large-scale disasters "have become more frequent in recent years and there are growing concerns that the effects of climate change will further exacerbate the risk of natural disasters." Specifically, Tokyo will offer technical aid to African nations to help them develop rice varieties resilient to heat and low rainfall, enhance the use of fertilizers and train workers to disseminate agricultural technologies. Japan will also help poor nations mainstream disaster prevention plans and encourage them to create hazard maps, incorporating anti-disaster perspectives in their projects to avert natural calamities. During the one-day meeting of the panel, Japan aired concerns about possible negative effects on developing economies amid the global financial turmoil, saying private financial flows into those nations may significantly decline. Shinohara said exogenous shocks from soaring food and fuel prices in developing nations could "destroy the achievements of years of development efforts." Although crude oil prices have sharply dropped recently in the global market, it is unclear whether inflationary pressure on commodity prices will ease dramatically, a Japanese official said. Copyright ? 2008 Kyodo News International, Inc. |