The World Bank has said that developing countries would face financing shortfall of between US$270 billion and 700 billion dollars this year as private sector creditors shun emerging markets, according to the reports of the News Agency of Nigeria.
The bank warned in a statement issued in Lagos on Tuesday that only one quarter of vulnerable countries would have resources to prevent increased poverty.
The statement said that international financial institutions could not cover the shortfalls which included public and private debt and trade deficits.
According to the bank, solution will require collaboration among governments, multilateral institutions and the private sector.
"We need to react in real time to a growing crisis that is hurting people in developing countries," the statement quoted the bank's President, Robert Zoellick as saying.
The bank said that the global crisis needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis.
"We need investments in safety nets, infrastructure and small and medium size companies to create jobs and to avoid social and political unrest," it said.
"The global economy is likely to shrink this year for the first time since World War Two, with growth at least five percentage points below potential," the bank added.
The World Bank said that its forecasts showed that global industrial production would be 15 percent lower than its levels in 2008 by the middle of 2009.
It said the financial crisis will have long-term implications for developing countries, noting that debt issuance by high-income countries is set to increase dramatically, crowding out many developing country borrowers, both private and public.
The bank said that many institutions that had provided financial intermediation for developing countries had virtually disappeared.
According to the statement, developing countries that can still access financial markets face higher borrowing costs and lower capital flows, leading to weaker investment and slower growth in the future.
(Xinhua News Agency March 11, 2009)
