While he offered few details about the program, 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 percent this year, the first decline since World War II, Zoellick said.

Previously, the institution said the world economy would likely shrink somewhere between 1 and 2 percent this year.

Growth in developing economies was expected to slow to a tepid 2.1 percent 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.

They should do this by endorsing a WTO monitoring system to prevent a further build up of trade restrictions even if the measures do not necessarily violate WTO rules, and should accept the “moral suasion” of public reviews that name and shame countries.

“No one should want isolated infringements to become a pattern, eroding one of the most important bulwarks between this crisis and the 1930’s,” said Zoellick, the US’s former trade representative.

Source: Reuters