IMF, World Bank meeting overshadowed by financial crisis

WASHINGTON: The International Monetary Fund and the World Bank were meeting on Sunday in the shadow of the most severe financial crisis since the 1930s which threatens to undo progress made by developing countries.

IMF head Dominique Strauss-Kahn warned on Saturday that even as the global financial system faced meltdown, it would be a mistake to forget the "other crisis" of soaring food prices and aid cutbacks faced by developing countries.

"We are in a big crisis but don't forget the other one," Strauss-Kahn said, adding that while food costs had moderated in recent months, "this bill is still unaffordable for poor countries."

Donor country budgets were being strained as the financial crisis rips through markets and banks, slowing the economy, but Strauss-Kahn called on them not to cut back on their aid commitments.

Poor countries "absolutely need this money to avoid starvation."

The 185-member IMF and especially the World Bank are tasked with aiding development and their annual meetings normally devote much time to reviewing progress made and new programs.

This year their meetings have been completely overshadowed by the financial crisis, with a major summit of eurozone leaders underway in Paris to follow up a Group of Seven industrialized nations gathering in Washington on Friday.

The G7 - the United States, Britain, Canada, France, Germany, Italy and Japan - said they would use all means available to combat a crisis which some developing countries say is the fault of the developed world.

"Who will compensate the innocent countries who are going to ... suffer from this debacle?" Kenyan Foreign Minister John Michuki asked on Saturday.