World Bank to create $50 bn trade fund

While he offered few details about the programme,which is being considered by the World Bank board later on Tuesday,Zoellick said the drop in world trade was exacerbated by a shortfall in trade credit,which allows exporters and importers to settle accounts.

“These public funds can be leveraged through a risk-sharing arrangement with major private sector partners,” Zoellick said.

Working with the World Trade Organization,the World Bank could also tap resources and the experience of national export credit agencies,he said.

In updated forecasts,the World Bank now projects the global economy to contract 1.7 per cent this year,the first decline since World War Two,Zoellick said. Previously,the poverty-fighting institution said the world economy would likely shrink somewhere between 1 and 2 per cent this year.

Growth in developing economies was expected to slow to a tepid 2.1 per cent this year,Zoellick said,as global demand,private capital flows and remittances all fall.

To address the crisis,Zoellick said the G20 should begin by reforming and empowering existing institutions like the World Bank,WTO and the International Monetary Fund,including by giving rising emerging powers a bigger say in decisions.

The G20 should also give the institutions greater oversight of national policies to improve transparency,accountability and ensure better policy coordination.