World Bank head Robert Zoellick acknowledged that the ''developing countries risk very serious setbacks to their efforts to improve the lives of their populations from any prolonged tightening of credit or a sustained global slowdown.'' IMF Managing Director Dominique Strauss-Kahn said the financial crisis added a crisis of rising food and energy prices in poor countries. ''We should not forget this other crisis, that hit the developing world rather hard,'' Kahn added.
Indian Finance Minister P Chidambaram, who could not turn up because of his preoccupation back home, sent a copy of his speech, in which he said, ''the developing countries will suffer for no fault of theirs. They did not cause the contagion. Many are not well-equipped to face the consequences.'' The speech was read out by a member of the Indian delegation during the IMF-World Bank joint annual meeting.
Chidambaram said, ''the long-term solution to this problem was to increase the supply of food grains; immediately, however, we should avoid wastage and diversion of food to fuel. That requires a renewed thrust to public investment in agriculture with policies designed to boost private investment as well.'' The Indian minister drew attention to the twin problems that the poorer countries might have to face in the wake of global crises: difficulty in getting access to the funding and decline in their exports as a result of cut in the demand of their product in the West, faced with financial crisis.
Later addressing a press conference, Zoellick said the International Finance Corporation, the private sector lending arm of the IMF, was exploring the possibility of a fund to help recapitalise banks in the developing world.
Earlier, at the IMF meeting, Finance Ministers and top finance officials from around the world endorsed the action plan drawn up by the Group of Seven richest industrial countries, pledging close cooperation in rescuing distressed banks, prevent bankruptcies and assure resumption of the credit flows as demanded by the developing nations.