Fund Not Satisfied With Recovery, World Bank Bemoans High Food, Fuel Crises
Washington, DC, USA-
The world may be on the path to recovery following the global financial crisis but it is not the kind of the recovery that the world needs, Dominique Strauss-Kahn, the head of the International Monetary Fund (IMF) has revealed.
“Certainly the recovery is getting stronger, but this is not the kind of recovery we want because”, Strauss-Kahn told a news conference ahead of major discussions of the Spring Meeting.
A regular routine, the Spring Meeting is being jointly held with the World Bank which brings together thousands of government officials, journalists, civil society members and other interested observers to discuss the works of the Fund and World Bank.
Strauss-Kahn argued during a jam-packed news briefing Thursday that the recovery has been unbalanced between countries as well as unbalanced within countries: “That’s the reason why uncertainty is still very high”.
The IMF Boss’ assertion comes after the Fund had released its three documentary publications in the documents of the World Economic Outlook, Global Financial Stability Report and Fiscal Monitor earlier the week which outlined the challenges the world’s economy faces.
‘No Room For Complacency’
Reminding the world that the financial crisis is not yet over, Strauss-Kahn warned of complacency: “We must beware of complacency…… The apex of the crisis is behind us, but it would be part of the complacency I am trying to avoid to believe that we are in the post-crisis era.”
He emphasized that recovery means little if growth does not translate into jobs.
The financial crisis rocked the world’s economy from 2008 to 2009 to the extent that many feared it would have rekindled the Great Depression.
New Risks: High, Volatile Food & Fuel Prices
Earlier, the World Bank President Robert B. Zoellick in a previous press briefing stressed the importance of tackling what he said are high and volatile food prices he said are new risks facing the world that have caused already 44 million people falling below the poverty line.
He projects that another 10 million will fall into “extreme poverty- that is where people live on less than $1.25 a day. And a 30 percent increase would add 34 million more people to the world's poor, who number 1.2 billion.”
Zoellick said while the world may be coming out of one crisis -the financial and economic crisis- the new risks are wrenching challenges: “……high and volatile food prices; high fuel prices with knock-on effects for food and, through food for stability; political upheaval in the Middle East and North Africa; turmoil in Cote d'Ivoire; repeated natural disasters; rising inflation in emerging markets with some risks of overheating; sovereign debt issues in Europe.” He said the biggest threats to the world’s poor are the high and volatile food prices.
High food inflation, mix in price gyrations, and then stir higher fuel costs, and a toxic brew of real pain are contributing to social unrest, the World Bank Chief noted.
“Food prices were not the cause of the crises in the Middle East and North Africa, but they are an aggravating factor. Our latest Food Price Watch shows that there is double-digit food price inflation in Egypt and Syria. It shows that commodity price spikes particularly hurt poor countries.”
As a show of the Bank’s commitment to fight the crisis, a gigantic screen outside its Headquarters in the Federal Capital films the rate at which the world’s poor gets hungrier by the day.
G-20 & Solution
The Bank’s Chief however believes that with the G20, a solution can be found on the crisis. “The G-20 can play a leading role. I believe multilateralism must be focused on doing real things in the short term while building toward mid- and longer-term actions.”
Otherwise known as the Group of Twenty, the G-20 is made of Finance Ministers and Central Bank Governors from a group of 20 major economies.
Pleased that the French-led G-20 has made a top priority for its topic of food, he said the Bank is working closely with the G20: “And I believe we can take a number of important steps that will help in two key areas: food price volatility and food security. We are going to be using these meetings with the G187 to help prepare the way.”
Stressing the need to do more on the production side, Zoellick disclosed that the World Bank is now investing about US$7 billion a year in improving agricultural production, from seeds to irrigation to storage.
Announcing aUS$500 million budget support operation that should leverage another $700 million from other donors for Tunisia, the Bank’s chief reminded the world that the revolution in that North African state began with the self-immolation of a fruit seller who was harassed by authorities.
For Ivory Coast’s situation, he stressed that the troubled nation needs security, jobs, and justice, adding that the Bank stands ready to offer important assistance including financial, policy, and technical.
“If the security situation allows, we can within the next couple of weeks reactivate some World Bank programs worth about $100 million to help the people in Cote d'Ivoire”, he said.
He spoke of the Bank’s engagement with the dramatic events in the Ivory Coast.