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U.S. Government shutdown threatens world's poor, World Bank says

By Catholic Online (NEWS CONSORTIUM)
October 2nd, 2013
Catholic Online (www.catholic.org)

World Bank President Jim Yong Kim warned that a partial government shutdown in Washington could have troubling consequences for the world's poor. Kim made the announcement as laid out a new plan that includes a major increase in funds to assist those living in poverty in nations scarred by war.

LOS ANGELES, CA (Catholic Online) -  Kim says that the governmental shutdown sends a worrisome signal about the world's largest economy, saying that U.S. fiscal uncertainty "combined with other sources of volatility in the global economy could do great damage to emerging markets and developing countries in Africa, Asia, and Latin America that have lifted millions of people out of poverty in recent years."

Kim assumed his post last year. He has launched a major reorganization of the bank to make the institution more nimble and useful, especially to middle-income countries. He is seeking to revitalize the bank around a poverty-eradication goal.

He maintains that inequality and limited opportunities for the poorest people in each country can drive instability and breed conflict. Kim pointed to the changes wrought in the Middle East, where a wave of protests in the "Arab spring" drove decades-old rulers from power.

"This is what happens when prosperity is reserved for a select few," he said. "All of those left out feel deeply the burn of inequity."

Kim committed the bank in April to twin goals: One, eliminating extreme poverty by 2030 and secondly,  boosting the incomes of the poorest 40 percent of the population in each country.

The World Bank, Kim says  must focus on "bold" projects and technical solutions to countries. This will involve working with the bank's private sector arm, the International Finance Corporation, or IFC, to encourage businesses to create jobs in poorer countries.

"Embracing the private sector and their role in development is not about whether you like the private sector or you have warm feelings about (it)," he said. It's impossible to eliminate poverty and meet the infrastructure needs of poor countries with public money alone, he says.

India alone is likely to need $1 trillion for infrastructure in the next few years. Aid from the official sector currently only totals about $125 billion annually.

In turn, the World Bank will need to concentrate on so-called "fragile states," those either in conflict or in danger of it, which will house most of the world's poor people in the next five years. Kim said the bank's fund for the poorest will plan to increase its funding to fragile states by 50 percent over the next three years, as would the IFC.

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