Fri 10 Oct 2008, 4:23 GMT
By Lesley Wroughton
WASHINGTON (Reuters) - A new World Bank report on Thursday named 28 countries in Africa, Asia and the Middle East facing financial strains due to high food and fuel costs and now from a cascading credit crisis.
World Bank President Robert Zoellick said the world should not forget the "human rescue" needed in developing countries as it focused on the spreading market crisis.
Among the "fiscally vulnerable" countries are Jordan, Cambodia, Lebanon, Jamaica, Eritrea, Ethiopia, Tajikistan, Madagascar, Nepal, Sri Lanka, Rwanda, Malawi, Ivory Coast, Eritrea, Fiji, Haiti, Seychelles and Mauritania.
The report, published ahead of weekend International Monetary Fund and World Bank meetings of finance and development ministers, said many of these countries had little or no room to take on new debt to afford the higher prices.
It said resource-rich developing countries had the means to cushion the current account impact of costlier food and fuel. But inflation is rising and they could be afflicted by "Dutch disease," a phenomenon in which high revenues from natural resources lead to a strengthening of a currency.
"Over recent weeks, attention has focused on the size of financial package, and on the impact on Main Street," Zoellick told a news conference ahead of the meetings.
"There are Main Streets all over the world. We must look beyond the financial rescue to the human rescue," he added.
Zoellick said the World Bank was tentatively forecasting growth in developing countries could slow to around 4 percent, significantly lower than its April forecast of 6.6 percent.
The IMF said growth in emerging and developing states would reach 6.9 percent this year, slowing to 6.1 percent in 2009.
Zoellick said a fall in exports from slowing advanced economies will trigger a fall-off in investments, while deteriorating financing conditions, combined with monetary tightening, will trigger business failures and possibly banking emergencies in developing nations.
The bank has been warning that the "double jeopardy" of higher food and fuel prices could push 100 million people deeper into poverty. It also said higher prices will increase the number of malnourished people around the world in 2008 by 44 million to over 960 million.
"Currently these countries, on average, are set to receive no increase in project and program aid," Zoellick said.
The report on financially strained countries said policy actions to deal with higher food and energy prices were causing the fiscal pressures.
As prices climbed, governments have tried to shield the poor by imposing fuel and food tax rate cuts, increasing subsidies and underpricing electricity from oil and gas.
The World Bank said countries whose budgets were squeezed by higher prices could qualify for its assistance, which would target specific reforms to reduce unsustainable energy or food subsidies or design social programs that targets the poorest.
Zoellick also said it was important that the world's industrial countries did not forget their promises of aid to the poorest countries, as the financial crisis .
Zoellick said G7 industrial countries were "far behind" promises they made at a 2005 summit of world leaders at Gleneagles, Scotland, where they pledged to double aid to Africa by 2010.
"The poorest cannot be asked to pay the biggest price," Zoellick said. "For the poor, the costs of crisis can be life-long," he added.