The global financial crisis and the liberalization of financial services has led to a financing shortfall for developing countries of between $US 250 and $US 750 billion, according to Martin Khor, executive director of the South Centre.
Speaking at the closing plenary of the United Nations Conference on Trade and Development (UNCTAD) two-day symposium in Geneva last month, Khor warned of a new debt crisis hitting developing countries.
Khor blamed the problem on a number of factors, including the global financial meltdown and the impact of conditions attached to World Bank and IMF. He also highlighted the role that trade agreements have played.
“The current free trade agreements between the African Union countries and the European Union entail further cuts to African tariff lines—to about 70 to 80 per cent of their tariffs currently. This would drastically reduce government revenue and increase public debt.”
Khor also warned that attempts to liberalize the trade in financial services within the WTO’s Doha Round of negotiations could make matters worse by restricting the policy space needed by governments to re-regulate the sector.
“There is a pressing need to review these proposals in light of the current crisis,” he said.