Skip to main content

World Bank boss: U.S. debt crisis will hit globe's 'poorest'

By CNN Wires
October 9, 2013 -- Updated 1846 GMT (0246 HKT)
STORY HIGHLIGHTS
  • World Bank head says U.S. debt crisis could be 'devastating' for global economy
  • Jim Yong Kim spoke Richard Quest in Washington D.C., where economic leaders are gathered
  • Kim said those involved in the political wrangling needed to remember it would hit the 'little guys' hard

(CNN) -- A U.S. default on its debt would be "devastating" for the global economy and would hit the poor particularly hard, World Bank president Jim Yong Kim told CNN's Richard Quest Wednesday.

Quest spoke to Kim in Washington D.C., where the world's economic and political world leaders have gathered for the annual meetings of the World Bank and International Monetary Fund.

READ MORE: Will glitches derail Obamacare?

The meetings come in the shadow of a partial shutdown of the U.S. federal government and amid fears the world's largest economy will be unable to pay all its bills later this month due to failure by politicians to raise the country's borrowing limit.

We often forget it has a direct impact on the poorest
Jim Yong Kim , World Bank president

On Tuesday, President Barack Obama said he was ready to talk about Republicans' demands in an effort to end the stand-off, but he wanted Congress to first end the government shutdown and raise the debt ceiling, even if just for a short period.

Kim said he did not want to comment on the politics but those involved in the wrangling needed to remember that "even if there is something heroic right at the end...it's having an impact on the little guys."

IMF: Debt default could damage economy

READ MORE: By the numbers: Shutdown and debt ceiling

Economist: I think Obama will step in

The debt crisis had the potential to be "devastating," with the threat of default the "greatest concern" he said.

Economist: This could be another Lehman

The closer the U.S. got to default, the greater impact it would have on the globe's poorest -- such as the rice farmer in South East Asia, or young person in the Middle East trying to start a business -- as the cost of capital rose. "We often forget it has a direct impact on the poorest," Kim said.

The World Bank had prepared contingency plans to support countries if the U.S. debt crisis further roiled global markets, Kim said. "We're ready to move...to support the poorest countries," he said. "The muscle memory is in place, we are ready to go."

WATCH MORE: IMF: Debt default could damage economy

Meanwhile, the World Bank is focused on halving poverty from 18% to 9% by 2020, Kim told Quest. Extreme poverty is in retreat but the World Bank had set an interim target to ensure it was able to reach its goal of bringing poverty down to 3% by 2030.

"We have a huge amount of work to do," but an interim goal would ensure the World Bank remained on track, Kim said. Those who remained in poverty beyond that are among the hardest to reach, and would require focused assistance, Kim added.

ADVERTISEMENT
Part of complete coverage on
December 16, 2014 -- Updated 2245 GMT (0645 HKT)
Pakistan Taliban say the school attack was revenge for the killing of children in a military offensive -- but they are being pressed by defections to ISIS.
A group that claims it hacked Sony Pictures has posted a public threat against moviegoers who see Sony's "The Interview."
December 18, 2014 -- Updated 0243 GMT (1043 HKT)
The gunman behind the deadly siege in Sydney this week was not on a security watch list, and Australia's Prime Minister wants to know why.
December 18, 2014 -- Updated 0948 GMT (1748 HKT)
Bestselling author Marjorie Liu had set her sights on being a lawyer, but realized it wasn't what she wanted to do for the rest of her life.
December 16, 2014 -- Updated 2027 GMT (0427 HKT)
CNN's Matthew Chance looks into an HRW report saying Russia has "legalized discrimination against LGBT people."
December 16, 2014 -- Updated 0212 GMT (1012 HKT)
The Sydney siege has brought home some troubling truths to Australians. They are not immune to what are often called "lone-wolf" terror attacks.
December 16, 2014 -- Updated 0012 GMT (0812 HKT)
A social media campaign condemning Islamophobia under the hashtag #illridewithyou has taken off after Sydney hostage siege.
Bill Cosby has kept quiet as sexual assault allegations mounted against him, but his wife, Camille, finally spoke out in defense of her husband.
December 15, 2014 -- Updated 1144 GMT (1944 HKT)
China-bound AirAsia flight turns back to Bangkok after passenger throws water over crew member.
December 15, 2014 -- Updated 1026 GMT (1826 HKT)
It takes Nepalese eye doctor, Sanduk Ruit about five minutes to change someone's life.
December 16, 2014 -- Updated 1054 GMT (1854 HKT)
This epic journey crosses 13,000 kilometers, eight countries over 21 days. Find out where.
December 19, 2014 -- Updated 1431 GMT (2231 HKT)
Each day, CNN brings you an image capturing a moment to remember, defining the present in our changing world.
Browse through images from CNN teams around the world that you don't always see on news reports.
ADVERTISEMENT