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World Bank, IMF bosses issue food price warnings

Proposals for dealing with the unfolding global financial crisis that has roiled economies around the world and led to higher food and energy prices have dominated the spring meetings of the IMF and the World Bank.

The sessions concluded yesterday with a meeting of the bank’s policy-setting committee, which is expected to focus on how the crisis is effecting developing countries, especially poor ones where the World Bank is trying to help reduce poverty.

“We must respond to the immediate emergency situation,” World Bank President Robert Zoellick said before the meeting. “But we must respond in such a way that can seize opportunities” to help developing countries achieve objectives, such as improving healthcare and reducing malnutrition and infant mortality.

He said other topics included promoting investment in Africa, climate change and rising food prices.

“In the US and Europe over the last year we’ve been focused on the prices of gasoline at the pump,” Zoellick said. “While many worry about filling their gas tanks, many others around the world are struggling to fill their stomachs. And it’s getting more and more difficult every day.”

He said in many developing countries, the poor spend up to 75 percent of their income on food, so when basic food prices rise, “it hits hard.”

Zoellick has said that in order to deal with the immediate crisis, the international community must close a US$500 million food gap identified by the UN World Food Program.

A similar warning on food prices was sounded on Saturday by the head of the IMF, Dominique Strauss-Kahn. He said there would be dire consequences if food prices remain high in developing countries, especially in Africa.

He added that the problem could also create trade imbalances that would impact major advanced economies, “so it is not only a humanitarian question.”

Governments in Haiti, Egypt and the Philippines, among others, are already facing social unrest because of rising food prices and shortages.

If the price spike continues, “thousands, hundreds of thousands of people will be starving. Children will be suffering from malnutrition, with consequences for all their lives,” Strauss-Kahn said.

Earlier on Saturday, Germany’s development minister, who was attending the World Bank’s meeting yesterday, called for greater regulation of the global biofuels market to prevent its expansion from driving up food prices.

“It is unacceptable for the export of agrofuels to pose a threat to the supply situation of the very people already living in poverty,” Heidemarie Wieczorek-Zeul said in a statement.

She said the world needs new rules that balance goals, including climate change mitigation, food security and social development.

The development group Oxfam, a frequent IMF critic, said rich countries are largely responsible for the food crisis because they have been cutting aid and encouraging biofuel production.

“Rich countries’ demand for biofuel is driving up food prices and is a big part of the problem,” said Elizabeth Stuart, an Oxfam policy adviser.



Also See: Haitian PM ousted over food prices



Also See: FAO seeks means to limit impact of biofuel on food
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