USG Sha Zukang and Financial and Economic Crisis
Impact on the Developing World
At a meeting of the Development Committee in Washington DC in October 2009, Mr Sha pointed out that “the policies [of developing countries] did not lead to this crisis, [yet] they are facing tremendous challenges in financing their balance of payments and in maintaining sustainable growth, as many confront sharp declines in their growth and exports.”
“Having opened up their economies over the past two decades, most developing countries are being hurt disproportionately as world trade has fallen precipitously, prices of primary commodities have collapsed, international tourism has dropped significantly, remittance flows are falling, capital flows have reversed sharply, trade credit has dried up and the cost of external borrowing has increased substantially.”
“Unemployment is rising at an alarming pace and global poverty rates are increasing, while government revenues are falling. All this severely constrains the policy capacity in many developing countries to mitigate the social impact of the crisis”
In a statement to the International Monetary and Financial Committee in Istanbul in 2009 Mr Sha addressed the challenges for the developing world to recover from the global economic and financial crisis.
“Most developing countries lack the resources to undertake the needed counter-cyclical measures for mitigating the impact of the global financial crisis on their economies,” he said.
He called for “more international efforts… to ensure adequate transfer of resources to developing countries, particularly to the most vulnerable low-income economies.”
Mr. Sha observed that “of the $1.1 trillion international financing packages under the auspices of the G-20... only $50 billion was earmarked for supporting social protection, boosting trade and safeguarding development in low-income countries, [and] this promise has only been partially fulfilled.”
DESA and the Economic Crisis
World leaders, finance ministers and representatives from across the globe gathered at the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development in June 2009.
Mr Sha speaking in a Round Table on Present and Future Impacts of the Crisis on, inter alia, Employment, Trade, Investment and Development Goals and the Millennium Development Goals stressed that a top priority in dealing with the crisis should be developing a “clear understanding of its precise impacts, especially in the developing countries”.
“The reliability of the analytical dimension of the crisis response provides the basis for designing effective policy measures to solve the crisis and prevent future ones. DESA is very much engaged in this analytical work, as well as supporting intergovernmental dialogue and capacity development efforts,” he said.
On the need for an injection of funds to assist poorer countries, Mr. Sha pointed out that “More and more reliable development financing must be made available to developing countries to cope with the multiple crises and to contribute to the recovery of global demand. An extra $500 billion in development financing will be needed in 2009 and 2010 for this purpose,” he said.