David Muwanga
8 January 2009
Kampala — UGANDA is to benefit from the World Bank's $2b (sh3,960b) facility for speeding up grants and long-term interest-free loans to help the world's poorest countries cope with the global financial crisis. Uganda is among the world's 78 poorest countries.
The International Development (IDA) Association's financial crisis response fast-track facility that was approved by the board of directors will provide rapid funding for social safety nets, infrastructure, education and health.
The IDA is the World Bank's private lending arm.
"The poorest people will be hit the hardest by the crisis that is likely to get worse this year with developing countries projected to grow at 4.5% down from 7.9% in 2007," the bank's president, Robert Zoellick, said.
"We want to help the poorest countries manage this with rapid financing to minimise its impacts and by assisting them in designing supportive policies," he said in a statement released recently on the bank's website.
The impact will be felt through: slower investments, reduced remittances, reduced tourism receipts and reduced availability of credit such as trade finance, falling terms of trade and slower export growth. Global trade is projected to decline this year for the first time since 1982.
The impact of the crisis on developed countries may also lead to shortfalls in aid flows, making economies that were already fragile less able to cope with their internal vulnerabilities and development needs.
The facility will be distributed after analysing the impact on each country focusing on household welfare, growth, capital flows, financial sector, trade finance, infrastructure development, employment, balance of payments, government budget, financing and debt sustainability.
Zoellick said 100 million people had been driven into poverty as a result of high food and fuel prices and an estimated 1% decline in developing country growth rates will trap 20 million more.
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