World Bank Senior Vice President and Chief Economist Kaushik Basu
WB Urges Emerging Economies To Invest In Poverty Reduction
MONROVIA, January 9 (LINA) - World Bank Senior Vice President and Chief Economist Kaushik Basu has disclosed that emerging market economies would do well to invest in infrastructure and support social schemes vital to poverty reduction.
A World Bank release issued by its Monrovia office noted that such policies can raise future productivity and reduce the fiscal deficit in the long run.
Basu said “this year’s Global Economic Prospects now goes beyond prediction and deepens our understanding of our global economic predicament."
The release also emphasized that with oil likely to remain cheap for some time, oil-importing countries should lower or even eliminate fuel subsidies and rebuild the fiscal space needed to carry out future stimulus efforts.
According to the release, in countries with elevated domestic debt or inflation, monetary policy options to deal with a potential slowdown are constrained, adding that in the foreseeable future, these countries may need to employ fiscal stimulus measures to support growth.
It observes that many developing countries have less fiscal space now than they did prior to 2008, having used fiscal stimulus during the global financial crisis; adding that in recent years, private debt levels have risen substantially in some developing countries.
The release said because the so-called fiscal multiplier effect is weaker now for many developing countries, they need to rebuild budgets in the medium-term, at a pace determined to country-specific conditions.
For a number of oil-importing countries, lower oil prices offer a chance to improve fiscal positions more quickly than might have been possible before mid-2014.