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World Bank shifts focus to impact on poor countries

Global finance ministers kept searching for ways to tackle the unfolding financial crisis, turning their attention to its effects on rapidly developing countries and poor nations at risk of being swept up in the turmoil.

US President George W Bush and the world’s financial leaders staged repeated displays of unity on Saturday to combat an unfolding credit crisis, hoping to calm investors whose panic has spread despite bold government action.

The crisis dominated discussions at the meeting of the G7 and the annual sessions of the IMF and World Bank.

The discussion shifted to the World Bank yesterday and its policy-setting committee, led by Mexican Finance Minister Agustin Carstens and World Bank president Robert Zoellick, a former US diplomat and trade negotiator.

He said the financial events could become a tipping point for many developing countries.

Zoellick said 28 countries were already fiscally vulnerable because of the twin shocks of rising food and fuel prices. But they were unlikely to receive any increase in aid from developed countries, which are tightening their own budgets.

“The poorest cannot be asked to pay the biggest price,” Zoellick said. “For the poor, the costs of the crisis could be lifelong.”

Bush pledged that his administration was doing everything possible to halt the market disruption.

Bush began his day with a White House meeting with finance ministers from the world’s richest countries and then made an unexpected stop at an evening meeting three blocks away at IMF headquarters.

Accompanied by US Treasury Secretary Henry Paulson and US Federal Reserve Chairman Ben Bernanke, he participated for about 25 minutes in a discussion with the G20, which includes rich nations as well as major developing countries such as China, Brazil and India.

Brazilian Finance Minister Guido Mantega said Bush told the finance ministers he was doing all he could to involve other countries in efforts to resolve the crisis.

In a joint statement, the G20 finance officials pledged to work together “to overcome the financial turmoil, and to deepen cooperation to improve the regulation, supervision and the overall functioning of the world’s financial markets.”

Other speakers at a policy meeting of the IMF echoed Bush in emphasizing the need for countries to work together.

“The depth and systemic nature of the crisis call for exceptional vigilance, coordination and readiness to take bold action,” the IMF said in its joint statement.

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