WASHINGTON, April 24 (Reuters) - The global economic and financial crisis is disproportionately hurting developing countries, which will have to deal with the fallout long after advanced economies, Group of 24 nations said on Friday.
The G24, made up of emerging and developing countries from Asia, Latin America and Africa, said sharp declines in growth and falling currency reserves were leading to rising unemployment and poverty levels.
“The risks of a further and more protracted deterioration in the world economy remain considerable,” a G24 communique said after a meeting on the sidelines of the spring gathering of the International Monetary Fund and World Bank here.
The communique noted the crisis had originated in advanced economies and was affecting developing economies through sharp falls in exports, remittances, private capital flows and a global credit crunch.
“We cannot really trust recovery plans and regulation, we need all components, we need a lot of effort to be made at all levels and on all sides to overcome this crisis,” said G24 chairman Adib Mayaleh, who is also Syria’s central bank governor.
“This year ahead of us is going to be more difficult than last year especially for developing countries because they were affected later by the crisis,” Mayaleh said, adding: “The consequences are going to last longer in developing countries than in developed countries.”
The group said developing countries will need urgent and unprecedented support from global financial institutions like the IMF and World Bank.
They welcomed the IMF’s new lending instrument, the Flexible Credit Line, designed for emerging economies that are performing strongly.
But they also urged the institutions be reformed through “bold actions” and a substantial increase in voting power for rising economic powers, and a fairer distribution of seats at the IMF’s 24-member board, dominated by European countries.
The G24 said the imbalances in voting power should be corrected over time “towards an equitable voting power distribution between developed and developing countries without diluting the quotas and shares of individual developing countries.”
Last year, the IMF approved a new formula for calculating voting power after a year of intense political negotiation, but the G24 said that should be reviewed to fix the “existing bias against developing countries.”
“We don’t believe that it is adequately reformed,” said Amar Bhattacharya of the G24 Secretariat. “It places a very very high weight on something called openness, which gives Europe a very high weight.”
The countries also called on the IMF to strengthen its surveillance of the world economy through “greater even-handedness” and closer monitoring of major advanced economies that have too often ignored the IMF’s policy advice.
The G24 also supported an early review of the role of the IMF in the international monetary system, including the role of major reserve currencies — the dollar, yen, euro and British pound.
China has been unusually aggressive and open about the need for a sweeping overhaul of the global monetary system and a new “super sovereign reserve currency”.
Beijing’s ultimate goal is to replace the globally dominant dollar with a beefed up Special Drawing Right, the IMF’s in-house unit of account.
Mayaleh said the group had asked China to provide more details of its plan for the SDR because Beijing’s idea is worth a closer examination.
Still, Washington and other advanced economies have said there is no need to worry about the dollar’s status as the dominant reserve currency, although the IMF has said the debate is worth having.
Reporting by Lesley Wroughton; Editing by Chizu Nomiyama