Growth must impact the poor – World Bank, IMF

The World Bank President, Dr Jim Yong Kim, has called on countries around the world to work harder and exhibit extraordinary ingenuity in every aspect of their policies and lifestyles to end extreme poverty in the world by 2030.

He said countries should ensure that the high growths in developing countries were sustained and bottlenecks identified in slow growing economies were removed.

Dr Kim also asked the countries to make new investments in infrastructure.

But most importantly, the World Bank President called for the need to make the high growth translate into poverty reduction and job creation, adding that they must also be inclusive to curb inequalities.

He was addressing more than 100 media personnel in Washington DC ahead of the 2013 Spring Meetings of the World Bank Group and the International Monetary Fund (IMF).

More than 200 ministers of finance, governors and policy makers were expected to meet with senior managers of the Bank and the Fund to look at recoveries made in the world economy, the prospects, old risks and new risks and how to proceed.

The meeting is also being attended by about 100 civil society members and persons from academia.

“I have no doubt that the world can end extreme poverty within a generation, but this will be much harder than most people realise. It is far from given. It will take ingenuity, focus, commitment and visionary leaders,” Dr Kim said. 

In a separate press briefing, the Managing Director of the IMF, Mrs Christine Lagarde, called for what she termed “full speed growth” across the world. 

This is in reference to the chequered growth being experienced in different parts of the world where some are growing faster than others. 

In places where unprecedented growths were taking place, such as in Ghana and other parts of sub-Saharan Africa, the growth is not creating jobs and not benefiting the poor.

Ghana has experienced tremendous growth over the past 10 years, reaching 12 per cent in 2011 and becoming the world’s fastest growing economy. 

However, unemployment issues continued to batter the economy, with high government domestic borrowing that had contributed to making interest rates higher which stifles private sector borrowing.

The annual reports of most banks released last month indicated unprecedented profits by the banks, with many of them riding at the back of investments in government treasuries rather than in loans they had created. 

Mrs Lagarde said growth should therefore be solid, balanced, sustainable and inclusive and must be rooted in green revolutions and economies to reverse climate change which threatened growth and prosperity of the world.

Both Dr Kim and Mrs Lagarde were unanimous on the need for customised policy responses in each three groupings within the world economy – those doing well, those recovering and those stagnating.

The IMF expects global growth at 3.3 per cent this year, much the same as last year. This means the world economy had avoided the worse. But the Fund is worried that the recovery of financial markets was not translating into growth.

The World Bank on the other hand was optimistic that the world economy would soon come out of the economic crisis, given the continued strong growth in emerging and developing countries at around 5.5 per cent, with growth in sub-Saharan African countries expected to continue from the current seven per cent.

Growth in developing countries, which were expected to rump up to six per cent by 2015, accounted for more than half of global growth.

Dr Kim believed that, to end extreme poverty, three things must happen; high growth in the developing world must accelerate with the removal of bottlenecks, investments in infrastructure and ensuring that growth was of benefit to the poor with greater investments in social infrastructure such as healthcare and education.

For her part, Mrs Lagarde said the international community needed to support developing countries which were experiencing growth to make their growth inclusive and deliver the needed jobs.

“They should invest in infrastructure and social needs, this will bring about inclusive growth,” she added.

She called for more efforts by managers of the United States economy, the Eurozone and Japan, with strong reforms in the financial sector, as well as bold decisions, to deal with bottlenecks and risks to full-scale recovery.

Mrs Lagarde gave an assurance that they would help all 188 members to scale over their challenges.

Story: Samuel Doe Ablordeppey, Washington DC

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