WB, IMF warn of food price surge; metals prices could help
Surging food prices could prompt greater global conflict and lead to the starvation of hundreds of thousands, the International Monetary Fund and World Bank warned Saturday, while unveiling a plan to help poor countries better manage their natural resources.
“It may be the route of a lot of conflict in the future. If food prices go on how they are today, then the consequences ... will be terrible,” IMF Managing Director Dominique Strauss-Kahn told reporters. “Hundreds of thousands of people will be starving.” But the corresponding rise in metals and energy prices could at the same time present an opportunity for some developing countries to use “revenue windfalls” to improve the lives of their poorest citizens, World Bank President Robert Zoellick said.
Commodity prices have climbed 75% since 2000, while food prices have surged 83% in the past three years. The World Bank last week said 33 countries were threatened with social unrest as a result of food’s high prices. After a week of violent protests against rising food costs in Haiti, for example, parliament on Saturday dismissed its prime minister for failing to manage the situation. The rising prices represented “a burden for some ... an opportunity for others,” Zoellick said during the IMF and World Bank’s traditional spring meetings this weekend. But the positives could only come if the world’s poorest nations, especially in Africa, learn to better manage their huge natural resources that have been the source of so much conflict in the past, Zoellick said.
The World Bank, along with a collection of African ministers, other development bank heads and civil society members, unveiled a new assistance program to root out corruption in Africa’s most resource-rich countries and see that the recent boost in revenues goes to those in need. The African Union Commission’s deputy chair Erastus Mwencha welcomed the initiative, deploring that minerals were the cause of most military conflicts across Africa. “If you look at the mineral extractive industries in Africa ... the scars from this curse are all over the continent,” he said. About 15 African countries are already adopting an earlier version of a World Bank initiative launched in 2002 that requires companies and governments to disclose all revenues from extracting minerals.
The updated version launched Saturday would support governments in their efforts to clamp down on corruption across the “entire chain” of the process, including how to spend the recent surge in profits to reach their poorest people. Zoellick earlier this week said the rise in food prices alone may have set back efforts to reduce poverty by about seven years. The World Bank has blamed the price surge on the increased use of biofuels as an alternative source of energy. German Development Minister Heidemarie Wieczorek-Zeul on Saturday acknowledged the world may need to reconsider its use of biofuels amid the skyrocketing food prices. The IMF’s own regional report on Sub-Saharan Africa forecast Saturday that growth would remain strong at 6.5% in 2008, but warned that most countries were still unlikely to reach a UN-set goal of halving poverty by 2015.
Outside organizations said the new World Bank program would be measured by how it boosts the transparency of governments and mining companies. “To us corruption is one of the biggest obstacles to the fight against poverty in the world,” said Huguette Labelle, head of Transparency International, adding that there had to be accountability “along the whole line” of minerals production. (m&c.com)
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.