"Western governments have already started revising their humanitarian budgets and some aid organisations are talking about reducing their own budgets, something which will have devastating results to the poor," said Francoise Le Goff, the group's chief for southern Africa.
Le Goff said the IFRC, which has presence in 10 southern African countries, would be forced to re-prioritise its humanitarian response in the face of the crisis.
"At this stage we are not sure where exactly to cut or minimise funding, but our response to disasters would not be affected," said Le Goff.
She said most of the Western countries that are major donors are slipping into recession.
"For instance, the economy of Iceland, which donated one euro per inhabitant to the Red Cross, has virtually been wiped off," said Le Goff.
The Red Cross and Red Crescent Societies unveiled a 420-million-dollar budget for the next two years, but is also appealing for an additional 400 million dollars for aid operations around the world.
According to the organisation, about two-thirds of Southern Africa's population lives under their national poverty line.
Angola, Mozambique, Zambia and Zimbabwe are among the 20 poorest countries in the world, with an average per capita income of less than two dollars a day.
"Any reduction in assistance to African communities will have devastating consequences for millions of people, people who contributed the least to the woes of Wall Street and London City," said Le Goff.
"The simple truth is that any reduction to aid budgets would be short sighted from both a humanitarian and financial perspective," she said.
"In Africa, communities are facing rapidly rising humanitarian challenges," she added.
"We are also witnessing a re-emergence of previously 'forgotten' diseases such as tuberculosis, the ravaging effects of HIV and AIDS, malaria and cholera remain unacceptably unchecked," added Le Goff.