LONDON, June 16 Developing nations must be ready
for a severe global financial crisis should the euro zone fail
to cope with its current problems, outgoing World Bank chief
Robert Zoellick said in an interview published online on
Policymakers and investors are nervously awaiting the
outcome of this weekend's Greek election, which could empower
radical leftists threatening to tear up the terms of a bailout
deal and send shockwaves through financial markets.
Developing countries needed to "prepare for the uncertainty
coming out of the euro zone and the wider financial markets",
Zoellick told Britain's Observer newspaper.
"It will be better if they can avoid piling up short-term
debts that can come due in volatile periods and look to the
fundamentals of future growth - infrastructure and human
capital," he said.
The World Bank had been increasing its lending to support
Bulgaria's banking system - one of the most exposed to Greece -
and acting to prevent a credit crunch in southeast Europe, the
paper reported Zoellick as saying.
The bank was also taking unspecified measures to protect
countries in north Africa that were vulnerable to Europe's debt
crisis and trade finance facilities were being strengthened for
francophone west Africa, the newspaper added.
"Uncertainty in markets is now starting to increase costs
for developing countries," Zoellick said. "The ripple effects
are making everybody's life harder."
In a reference to tensions in the euro zone over Greece's
future, Zoellick said: "Europe may be able to muddle through but
the risk is rising. There could be a Lehmans moment if things
are not properly handled."
The bankruptcy of U.S. bank Lehman Brothers in September
2008 triggered a global financial slump that indebted western
nations are still struggling to recover from.
(Reporting by Tim Castle; editing by Andrew Roche)