The attention of policymakers is being drawn to addressing fiscal policy and financial issues in an effort to close the credit crunch and release financial flows, especially investment.
This focus on financial flows by governments and finance ministers is understandable. They have come under tremendous pressure to secure additional financial resources to meet current and emerging needs, such as stimulating the economy in the midst of declining revenues, exports, remittances, aid and investment flows. This is a depressing situation for emerging economies and other developing countries in need of a fresh injection of funds to revive economic growth, writes Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).
The situation can in fact lead countries to borrow from international markets -and possibly huge borrowings- paving the way for another debt crisis even as countries begin to emerge from the current crisis. The international community must be ready to deal with this potential new crisis. The dire situation could be aggravated by rising prices for food and fuel, as reflected in recent price movements.
Global Issues