 UNCTAD´s Secretary-General called for temporary debt relief for countries hard-hit by the crisis, telling a UN meeting that world attention to the crisis must not wane, regardless of signs of recovery in the developed world.
Debt-ridden developing countries already struggling with the economic crisis will be particularly hard hit if they do not receive some form of debt relief in the immediate future, UNCTAD Secretary-General Supachai Panitchpakdi warned a high-level meeting of the Economic and Social Council (ECOSOC) in New York. A temporary moratorium on their official debt servicing would give them some breathing space, he said.
"In the current global crisis situation", he added, "both debtor and creditor countries would probably be better served if scarcer foreign exchange earnings in the debtor economies were used for the purchase of imports rather than for debt servicing".
The developing world, beset by declining export earnings, FDI and remittances and rising social and fiscal costs, will also take much longer to recover from the crisis than the developed countries, he said. And if the latter indeed begin their recovery this year and next - as some are predicting - the current sense of urgency may fade away, along with laudable proactive measures now under way. Any monitoring mechanism designed to predict or avert future crises should therefore consider trends throughout the world economy, including in developing countries, and not just in the advanced economies.
Mr. Supachai also recommended that supplementary IMF funding should be used to stimulate and expand developing-country economies, as the US and other developed countries were doing. It should not compel governments to curb public spending or tighten monetary policy, which would have exactly the opposite effect.
UNCTAD is predicting a $2 trillion financial shortfall for developing countries, along with a 30% drop in exports in some sectors. A decline in food production is also likely, as is a recurrence of food crises in some parts of the developing world.
The 27 April meeting, an annual dialogue at ECOSOC among the World Bank, IMF, WTO and UNCTAD, focused on the implications of the global crisis for developing countries and development financing.
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