Head of IMF says if food prices remain high, consequences are dire
Sunday, April 13th, 2008
Published: Sunday, April 13, 2008 | 2:53 AM ET
Canadian Press: Harry Dunphy, THE ASSOCIATED PRESS
WASHINGTON – The head of the International Monetary Fund warned on Saturday that if food prices remain high there will be dire consequences for people in many developing countries, especially in Africa.
Dominique Strauss-Kahn 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.
Strauss-Kahn said 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.”
Earlier Saturday, Germany’s development minister, who is attending the World Bank’s meeting to be held Sunday, 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.
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She said the world needs new rules that balance goals including climate change mitigation, food security and social development.
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The Washington-based IMF and World Bank were established 64 years ago to respectively regulate the global economy and provide aid to poor countries to reduce poverty.
The finance ministers and central bankers said their meeting took place “at a time of unusual uncertainties surrounding global and financial market prospects.”
“It stresses that the challenges facing the world economy are global in nature, requiring strong action and close co-operation among the membership.”
They said risks to economic outlook “come from the still unfolding financial market turmoil and from the potential worsening” of housing markets and the credit crisis.
“Inflationary risks – notably from higher food, energy and commodity prices – have also risen,” the communique said.
The IMF said that in dealing with these risks, governments must make sure inflation is kept under control, recognizing that each country’s situation is different but coherent action is necessary.
Another topic on the committee’s agenda was IMF reform.
The ministers said changes such as giving developing countries with rapidly-growing economies such as Brazil, India and China slightly more of a say in IMF operations “will strengthen the fund’s role in promoting financial stability and international monetary co-operation.”