Zoellick foresees slow recovery
Posted by meb at October 3rd, 2009
World Bank President Robert Zoellick said the global economy will recover slowly from its worst recession since World War II and the Washington-based lender may require a capital increase to meet developing countries’ financing needs.
“We’ve broken the fall of the financial crisis,” Bloomberg quoted Zoellick as saying at a news conference in Istanbul on Friday. Still, 2009 “will continue to be a difficult year” and “you’ll have a slow recovery,” he said.
“There are potential challenges for Turkey’s recovery,” he said. “We are expecting a slow recovery for Turkey. The biggest challenge for Turkey might be protectionism.”
The medium-term economic program announced last month is “sound,” Zoellick said. “Turkey has the growth potential with its dynamic youth, but the biggest problem is unemployment.”
The World Bank needs a capital increase of as much as $11.1 billion, according to a report prepared by the bank’s staff. Zoellick said Sept. 29 he hoped that the bank’s shareholders, who will discuss a possible plan in Istanbul, could make a decision on additional resources by April.
The increase would range between $2.8 billion and $8.7 billion for the International Bank for Reconstruction and Development, which lends to countries, and between $1.8 billion and $2.4 billion for the International Financial Corp., which lends to companies. The total amount needed will depend on whether the recession lingers and the World Bank raises fees.
“Fortunately, we came into this crisis very well capitalized,” Zoellick said Friday, adding that IBRD lending was approximately $33 billion in the fiscal year ended June 30. That was about three times as much as the previous year, and the current fiscal year is likely to top $40 billion, he said.
The staff report estimates that the IBRD’s commitments will likely reach $136 billion in the period from fiscal 2009 to 2012. Zoellick said the IFC “also faces a capital constraint.” Overall, “that leaves the potential for a general capital increase,” he said.
source: Hurriyet daily news
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