What effect is the international banking crisis having on the world’s poorest countries?
Over the past decade, a number of heavily-indebted developing countries were able to access loans again thanks to HIPC debt relief. They have since been treated like newly industrialising countries, but new loans are now becoming more expensive. That will make a significant difference once existing credits expire. The countries concerned will need fresh funds – not right away, but in the foreseeable future. Solvency problems can therefore already be anticipated for 2010 or 2011. The financial crisis goes hand in hand with a dramatic economic downturn in rich countries. What does that mean for developing countries? There are several dimensions. First of all, budgets for official development assistance (ODA) might be cut, as tax revenues in rich countries decline. Furthermore, there is less demand for the commodities poor countries export. Zambia, for example, had benefited from high copper prices on the global market in recent times, but those prices have fallen below their 2005-levels
