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Crisis reveals growing finance
gaps for developing countries
Research shows poorer countries are short of $270-$700 billion
for 2009
Washington - Developing countries face a financing shortfall of
$270-700 billion this year, as private sector creditors shun
emerging markets, and only one quarter of the most vulnerable
countries have the resources to prevent a rise in poverty, the World
Bank said.
In a paper the meeting of the Group of 20 finance ministers and
central bank governors last week, the World Bank said that
international financial institutions cannot by themselves currently
cover the shortfall -- that includes public and private debt and
trade deficits -- for these 129 countries, even at the lower end of
the range. A solution will require governments, multilateral
institutions, and the private sector. Only one quarter of vulnerable
developing countries have the ability to finance measures to blunt
the economic downturn, such as job-creation or safety net programmes.
“We need to react in real time to a growing crisis that is hurting
people in developing countries,” said World Bank Group President
Robert B. Zoellick. “This 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.”
The global economy is likely to shrink this year for the first time
since World War Two, with growth at least 5 percentage points below
potential. World Bank forecasts show that global industrial
production by the middle of 2009 could be as much as 15 percent
lower than levels in 2008. World trade is on track in 2009 to record
its largest decline in 80 years, with the sharpest losses in East
Asia.
The financial crisis will have long-term implications for developing
countries. Debt issuance by high-income countries is set to increase
dramatically, crowding out many developing country borrowers, both
private and public. Many institutions that have provided financial
intermediation for developing country clients have virtually
disappeared. 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.
“When this crisis beganpeople in developing countries, especially
those in Africa, were the innocent bystanders in this crisis, yet
they have no choice but to bear its harsh consequences,” World Bank
Managing Director Ngozi Okonjo-Iweala said in remarks prepared for
delivery at a conference in London organized by Britain’s Department
for International Development. “We must look at poor people as
assets and not liabilities. The new globalization should mean we
adopt new ways of caring for our infants, educating our youth,
empowering our women and protecting the vulnerable.”
The paper said that 94 out of 116 developing countries have
experienced a slowdown in economic growth. Of these countries, 43
have high levels of poverty. To date, the most affected sectors are
those that were the most dynamic, typically urban-based exporters,
construction, mining, and manufacturing. Cambodia, for example, has
lost 30,000 jobs in the garment industry, its only significant
export industry.
Contd.on page 14
More than half a million jobs have been lost in the last three
months of 2008 in India, including in gems and jewelry, autos and
textiles.
Many of the world’s poorest countries are becoming ever more
dependent on development assistance as their exports and fiscal
revenues decline because of the crisis. Donors are already behind by
around $39 billion on their commitments to increase aid made at the
Gleneagles Summit in 2005. The concern now is that aid flows will
become more volatile as some countries cut their aid budgets while
others reaffirm aid commitments, at least for this year.
In remarks prepared for delivery at the same conference in London,
World Bank Chief Economist and Senior Vice President Justin Yifu Lin
said developed countries should spend some of their fiscal stimulus
in developing countries as the economic effect could be significant.
“Clearly, fiscal resources do have to be injected in rich countries
that are at the epicenter of the crisis, but channeling
infrastructure investment to the developing world where it can
release bottlenecks to growth and quickly restore demand can have an
even bigger bang for the buck and should be a key element to
recovery,” Lin said in his prepared remarks.
World faces ‘Great Recession’: IMF chief warns
WASHINGTON, - The IMF last week warned the world was gripped
by a “Great Recession” that could throw millions back into poverty
and spark civil unrest, as the United States appealed for joint
action by nations against the crisis.
“The global financial crisis, that might now be called the great
recession, provides a sobering backdrop to our conference,” IMF
Managing Director Dominique Strauss-Kahn told delegates at an
anti-crisis meeting in Tanzania.
“The IMF expects global growth to slow below zero this year, the
worst performance in most of our lifetimes,” he said, urging wealthy
Western countries to maintain financial support for low-income
nations.
The IMF director also said there was now “a real risk that millions
will be thrown back into poverty” across the African continent and
that the economic crisis raised “the threat of civil unrest, perhaps
even a war.”
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Public seminar on global crisis
and Sri Lanka
Institute of Management of Sri Lanka (IMSL) in collaboration with
the Sri Lanka Foundation Institute (SLFI) continues its public
lecture series with the second lecture scheduled for the 19 March,
2009 on the topic “Global Economic Crisis and Sri Lanka” from 5.30
p.m. onwards.
The lecture will be conducted by Dr. Saman Kelegama, Executive
Director of the Institute of Policy Studies of Sri Lanka, and an
eminent economist in the country. He is a Fellow of the National
Academy of Sciences of Sri Lanka and was the President of the Sri
Lanka Economic Association (SLEA) during 1999-2003.
Sri Lanka has now begun to feel the ill-effects of the global
economic crisis, despite the optimism that has expressed earlier on,
that some countries will relatively have less exposure to the
crisis, including Sri Lanka. It is now feared that developing
countries would suffer serious set-backs through reduced demand for
exports, falling foreign direct investment (FDI) and capital flows
and declining foreign remittances. In this context, the lecture will
assess the current global economic crisis and highlight key issues
with regard to responding to the crisis, as well as policies to
overcome the challenges faced by the crisis, from a Sri Lankan
perspective.
Registration is free, on first-come-first-serve basis, and those who
are interested to participate are strongly advised to contact the
IMSL secretariat for registration. Further details of the Public
Lecture could be found at www.imsl.lk
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PwC ranks No. 1 in
Business Advisory Services and Management Consulting
NEW YORK– Kennedy Consulting Research & Advisory, the leading
research and advisory firm, has ranked PricewaterhouseCoopers (PwC)
number one in Business Advisory Services and Management Consulting
in its Global Consulting Marketplace 2008-2011 report.
PwC was also placed third in the Human Resources Consulting practice
area according to the study. The annual report reflects Kennedy’s
analysis of the global consulting marketplace, estimated at
approximately $300 billion in 2007.
This latest report and ranking confirms PwC’s strong market position
as a leading provider of Business Advisory Services and Management
Consulting. With over 25,000 Advisory professionals around the
world, PwC works collaboratively with over 80 percent of the world’s
Fortune 500 companies.
“At PwC, we’re working together with our clients to help them safely
navigate through a very difficult economic climate,” said Juan
Pujadas, Global and U.S. leader of PwC’s Advisory business. “We’re
providing practical, cost effective and strategic solutions to help
organisations find opportunities amidst uncertainty, and to
implement sustainable changes that can transform and improve their
business today -- and for the long term.”
According to the Kennedy report, PwC’s size and high potential for
growth make it well positioned to serve clients during current
conditions such as the recession, the decline in the M&A market, a
lack of new technology and the maturing global consulting market.
“Our approach to the market is to bring our clients the benefit of
our capabilities across our Advisory, Tax and Assurance businesses
-- bringing the “right” team of professionals to bear on the
client’s issues. It’s not only our size that sets us apart from
other firms, it’s our depth of experience and ability to help
clients across a range of industries find the right solution.” added
Pujadas.
Kennedy’s Global Consulting Marketplace report is produced annually
and provides a full spectrum analysis of the consulting marketplace.
Included are the drivers that shape client demand, market trends,
market size and growth, and analysis of the consulting landscape and
its leading players.
PricewaterhouseCoopers’ business advisory professionals provide
clients with the confidence to succeed by helping them anticipate,
create and manage change. Whether clients are proactively
implementing change or reacting to an unplanned event, we leverage
our Firm’s resources, deep industry experience, and functional
acumen across the areas of operations, finance, organisational
strategy and structure, process improvement, human resources
effectiveness, technology integration and implementation, risk
mitigation and crisis management to help organisations effect
sustainable change.
PricewaterhouseCoopers (www.pwc.com) provides industry-focused
assurance, tax and advisory services to build public trust and
enhance value for its clients and their stakeholders. More than
155,000 people in 153 countries across our network share their
thinking, experience and solutions to develop fresh perspectives and
practical advice.
The largest top 10 consulting firms:
1. PricewaterhouseCoopers
2. Deloitte’
3. KPMG
4. Ernst & Young
5. McKinsey & Co.
6. Accenture
7. Mercer (HR)
8. IBM GS
9. Booz Allen Hamilton
10. The Boston Consulting Group
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