Washington - Emerging market economies had a window of two or three months to make reforms now that the US Federal Reserve had refrained from scaling back its bond-buying programme, World Bank president Jim Yong Kim said yesterday.
“We think that now emerging market economies have maybe a two- or three-month window and the message we want to send to everybody is now is the time to make the reforms that you need to make,” Kim said at a news conference.
Kim, who took the helm of the multilateral lender in July last year, said the mere announcement by the Fed that it might begin tapering of its massive bond-buying economic stimulus programme had exposed weaknesses in some emerging economies and that they should tackle fiscal policy reforms and other changes needed to improve the business investment environment.
Before the Fed started scaling back its $85 billion (R848bn) in monthly bond purchases, emerging markets must make sure “you are focusing on fiscal policy and fiscal policy reforms that you need to make”, he said.
Kim said central banks globally were in “new territory”, and any withdrawal of stimulus needed to be gradual.
Kim also said the impasse between the US Congress and President Barack Obama over raising the government’s borrowing limit might harm developing nations’ economies.
A “near miss” over raising the US debt ceiling in 2011 increased borrowing costs and pushed down stock prices in developing countries for months, Kim said.
Again this time, “even a near miss will have a real impact on developing countries”. - Reuters and Bloomberg