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Sunday, April 13, 2008

World Bank and IMF focus on world food prices, market woes

by Harry Dunphy, Associated Press Writer, April 13, 2008

WASHINGTON -- Finance ministers and central bankers are focusing their spring meetings on ways to deal with the unfolding financial crisis that has roiled economies around the world and led to higher food and energy prices.

Sessions of the International Monetary Fund and World Bank end Sunday with a look by the bank's policy-setting committee at the effect on developing countries, especially poor ones where the bank is trying to reduce poverty.

"We must respond to the immediate emergency situation," Robert Zoellick, the bank president, said before the meeting, but in a way that helps developing countries achieve objectives such as improved health care and reduced malnutrition and infant mortality.

The officials are also talking about climate change, investment in Africa and rising food prices.

"In the U.S 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." The poor already spend up to 75 percent of their income on food in many developing countries, he said.

Zoellick has said that to deal with the immediate crisis, the international community must fill a food shortage valued at a minimum of $500 million by the U.N. World Food Program.

A similar warning was sounded Saturday by the head of the International Monetary Fund, 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 hurt advanced economies, "so it is not only a humanitarian question."

Governments in Haiti, Egypt and the Philippines are among those already facing social unrest because of food prices and shortages. If the price increases continue, Strauss-Kahn said, "Thousands, hundreds of thousands of people will be starving. Children will be suffering from malnutrition, with consequences for all their lives."

The development group Oxfam, a frequent IMF critic, said rich countries are largely responsible for the food crisis because they have been cutting aid to developing countries and encouraging biofuel production, which the IMF says is responsible for almost half the increase in the demand for food crops.

"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. "Meanwhile, by cutting aid levels, they are doing precious little to be part of the solution."

Germany's development minister urged 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.

Associated Press writer Desmond Butler contributed to this report.

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