World Bank warns of growing disparities between rich and poor countries

World Bank President Ajay Banga warned on Tuesday that the growing divide between rich and poor countries threatens to deepen poverty in the developing world. He made this statement during a meeting of finance ministers and central bank governors of the G20 countries hosted by India.

Many countries are still trying to recover from the consecutive crises of the pandemic and the Russian invasion of Ukraine, which led to a sharp increase in fuel and commodity prices worldwide.

Furthermore, climate change is causing painful consequences for the least developed and least adaptive countries.

Banga expressed concern that the lack of progress in addressing these issues could lead to a severe division in the global economy, disproportionately affecting the poorest countries. He said during his speech at the G20 meeting, "What worries me is the lack of trust that quietly drives the North and the South away from each other at a time when we need to unite."

He pointed out that countries in the South understandably feel frustrated because, in many ways, they bear the cost of the prosperity of other nations.

He added that those countries "are deeply worried about the redirection of resources that were promised to them, towards the reconstruction of Ukraine... They feel that their aspirations are limited because global energy rules are not applied universally, and they are concerned that another generation will fall into the grip of poverty."

Banga, who was born in India and holds American citizenship, assumed the presidency of the World Bank in June, after being nominated for the position by US President Joe Biden.

He emphasized that the bank is working to enhance its capabilities, including mobilizing diverse capital from contributors to promote growth and job creation, emphasizing the need not to achieve economic expansion at the expense of the environment.

He said, "We cannot afford another period of emissions-driven growth."

The G20 meeting began on Monday and will continue for two days. Indian Finance Minister Nirmala Sitharaman, who chairs and hosts the meeting in Gandhinagar, Gujarat, opened the discussions, reminding her counterparts of their responsibility to steer the global economy towards strong, sustainable, balanced, and inclusive growth.

The meeting took place on the same day Russia announced the termination of an agreement that allowed the export of Ukrainian grain through the Black Sea since last year, despite the ongoing war against Kyiv.

UN Secretary-General Antonio Guterres warned that Russia's decision would put "hundreds of millions of people at risk of hunger" and that they would "pay the price."

German Central Bank Governor Joachim Nagel said on Tuesday, "We live in a complex time."

He added, "I must point out that Russia withdrew from the Black Sea-Ukraine initiative yesterday, and here we are looking for ways to help the weaker countries... this is really strange, and many countries hold Russia responsible for it."

Sitharaman and the Chinese Minister of Finance held a meeting on Tuesday, discussing "the economy of countries, inflation, trade, and acknowledging the importance of a positive business climate," according to a statement by the Indian Ministry.

The G20 talks also focused on reforming multi-party development banks, regulating cryptocurrencies, and the need to facilitate access to financing for the poorest countries aimed at mitigating and adapting to climate change.

It is also expected to implement the first stage of a fairer distribution agreement for the revenues from multinational corporate taxes, reached by 138 countries last week.

Multinational corporations, especially technology companies, are currently able to easily transfer their profits to countries with low taxes, even if they only conduct a small portion of their operations there.



AFP