IMF is Helping Countries Respond to Food Price Crisis

• Pages: 85-87

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The IMF is helping low-income countries hit by high food prices take appropriate policy action while providing financial assistance to some of the worst-affected nations, Managing Director Dominique Strauss-Kahn said.

In remarks prepared for a June 3-5 United Nations conference in Rome on world food security, Strauss-Kahn said that high food prices were stoking worldwide inflation and undercutting the economies of low-income countries, particularly in Africa.

The IMF has doubled financial assistance to four low-income countries affected by food and fuel price hikes and is discussing additional support with another 11 countries, Strauss-Kahn told delegates. He said that Burkina Faso, the Kyrgyz Republic, Mali, and Niger received the extra aid.

The IMF said on May 29 it was giving an extra $21 million to the landlocked West African nation of Mali to help with the crisis and boosting assistance to the Kyrgyz Republic, a mountainous Central Asian country, by $14.4 million.

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Crisis can be managed

Strauss-Kahn, a former French finance minister, said in remarks read into the record that the crisis could be managed if the world took appropriate action to

* address immediate needs of the worst-affected regions and feed the hungry

* help countries direct support to people who need it most, while avoiding actions that make things worse, such as export bans and price controls; and

* help countries contain the macroeconomic costs and stop the crisis from turning into a general inflation or balance of payments problem.

Balance of payments effects can also be large. IMF projections show that in about one-half of African countries the increase in the cost of food imports could exceed 1 percent of GDP this year. Increases are greatest in some of the poorest countries, such as the Democratic Republic of the Congo (almost 2 percent) and Mauritania (3 percent). In other countries, higher fuel prices are also having an important negative impact.

The Rome meeting, chaired by United Nations Secretary-General Ban Ki-moon, brought together the heads of key UN agencies, as well as the IMF and the World Bank, along with many heads of state and government. Ban called on world leaders gathered at the summit to take "bold and urgent" steps to tackle the global food crisis, including boosting food production and revitalizing...