Food costs pushing millions into poverty

2011-04-15 13:23
Washington - Soaring food and energy prices, still-fragile financial systems and continued tensions between the United States and China over trade and currency issues will all be on the agenda at meetings over the next three days of global finance officials.

World Bank President Robert Zoellick said on Thursday that food prices are 36% higher than they were a year ago and already have pushed 44 million people into poverty.

He called on major countries to do more to help poor countries meet the challenge of feeding their populations at a time of surging prices.

Finance ministers and central bank presidents of the Group of 20 major industrial countries were involved in talks that began on Thursday on ways to address the food crisis and to better co-ordinate their economic policies.

Zoellick cited a new World Bank study that showed that another 10% increase in global food prices could drive an additional 10 million people into extreme poverty.

That would be in addition to the 44 million people who have been driven into poverty since June because of soaring food prices. The World Bank estimates there are about 1.2 billion people living below the poverty line of $1.25 per day.

Support for north Africa

"We have to put food first and protect the poor and vulnerable, who spend most of their money on food," Zoellick said at a briefing to preview the upcoming finance meetings.

Those discussions began on Thursday with talks first among finance officials of the world's seven wealthiest countries - the United States, Japan, Germany, France, Britain, Canada and Italy.

Those countries were joined later by finance officials from the Group of 20 nations, which include not only the traditional economic powers but fast-growing emerging economies, including China, India and Brazil.

French Finance Minister Christine Lagarde and US Treasury Secretary Timothy Geithner also led a discussion on how the major economies could provide support in the Middle East and North Africa following a change of governments in Tunisia and Egypt.

In a joint statement issued after those talks, Geithner and Lagarde said the goal of the major economies would be to work with major financial institutions such as the International Monetary Fund and World Bank to support economic growth that would benefit a broader group of people in Egypt and Tunisia.

"We recognise that these transitions are about expanding the freedoms and opportunities of people," Geithner and Lagarde said.

Joint statement

They said a joint action plan would be developed with early recommendations coming in May to support "inclusive and sustained growth, transparency and improved governance".

After a dinner on Thursday night, the G-20 discussions were to continue on Friday, led by Lagarde. France is head of the G-20 this year. The group is expected to issue a joint statement of goals at the end of Friday's discussions.

The G-20 talks will be focused on making more progress on a set of economic indicators that the group can use to gauge whether countries are pursuing the correct policies to prevent the growth of dangerous imbalances in trade and government debt which contributed to the last financial crisis.

The United States is pushing for the indicators to be set up, hoping they can be used to bring more pressure on China to allow its currency to rise in value against the dollar as a way to narrow the huge trade gap that exists between China and the US.

However, Chinese officials do not want the rebalancing process to be used as a way to attack China's currency policies, and it was unclear whether any progress will be made during the Washington talks.

But the United States hoped to gain support from other G-20 nations, especially given the group's pledge to put in place policies to guard against a repeat of the past economic crisis at a time when the global economy remains fragile.

Risks to recovery

"There are lots of things to worry about and we want to make sure we don't fall back into another crisis as we did not that long ago," Canadian Finance Minister James Flaherty told reporters.

The finance meetings will wrap up on Saturday with meetings of the policy-setting committees of the 187-nation International Monetary Fund (IMF) and the World Bank that will discuss issues involving their institutions.

IMF Managing Director Dominique Strauss-Kahn said that while the global economy began growing again last year after the most severe downturn since World War II, there still were multiple risks to the recovery from rising energy costs to continuing debt problems in Europe and new inflation dangers coming from China and other fast-growing emerging economies.

"The recovery is getting stronger but ... it is not the recovery we want because it is still imbalanced," Strauss-Kahn told reporters. "We must be aware of complacency, and we need urgent action."


- AP
Read more on:    imf  |  g20  |  economy
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