MDB Heads Call for Inclusive Multilateral Solution to Financial Crisis

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Multilateral Development Bank heads have called for an inclusive multilateral solution to the global financial crisis. The call was made in a statement issued at the end of a meeting they held on Thursday, February 12, 2009, in Tunis at the African Development Bank’s Temporary Relocation Agency.

The financial crisis has spiraled into a global economic crisis with growth projected to fall to ½ a percent in 2009, its lowest rate since World War II, the statement says. Financial markets remain under stress; currency markets are highly volatile; global industrial production and merchandise trade have plummeted since November 2008; and asset values are falling sharply.  Our review of the situation in each region underlined the high levels of uncertainty and downside risks, the statement says.

“In emerging and developing economies the consequences go well beyond economic contraction or reductions in growth.  Unlike the advanced economies, these countries simply do not have resources to bailout their financial or other sectors, to provide a package of stimulus measures, or of social protection.  Access to credit has been sharply reduced as banks deleverage and meet first demands in home markets.  Emerging and developing countries face the prospect therefore of a reversal of hard won economic progress and stabilization; and indeed for some, a risk of a full blown development and humanitarian crisis.  The social and political strains are increasingly evident,” the statement says

The International Financial Institutions Heads further add: “We underlined our commitment to play a counter-cyclical role in support of the client countries to mitigate the impact of the crisis. Our institutions are already making unprecedented efforts, in line with their respective mandates using all available instruments. These include providing immediate balance of payment and budget support; establishing new emergency liquidity and trade finance facilities; mobilizing funding to maintain investments in critical public and private infrastructure; implementing measures to bolster the solvency and liquidity of banking systems; addressing acute financing needs in the private sector; frontloading allocations of concessional resources; speeding up implementation.”

Thursday’s meeting was held at the invitation of the African Development Bank (AfDB) Group’s President, Donald Kaberuka, and it brought together the IMF Deputy Director, H. Bredenkamp; the European Investment Bank (EIB) President, P. Maystadt; the Asian Development Bank (AsDB) Presidet, H. Kuroda; the InterAmerican Development Bank (IaDB) President, L.A. Moreno; World Bank President, R.Zoellick, President; and the European Bank for Reconstruction and Development (EBRD) First Vice President, V. Freeman.

These meetings constitute an important opportunity for an informal exchange of views among MDB heads on issues of common interest. In light of the gravity of the ongoing financial crisis, their discussions focused on their respective and joint response to the crisis and on further action and resources required to assist their client countries weather its impacts.