Typical street scene in Santa Ana, El Salvador. (Photo: iStock)

Typical street scene in Santa Ana, El Salvador. (Photo: iStock)

IMF Survey: Food Crisis: IMF Backs Some Policy Responses, Voices Caution on Others

May 23, 2008

  • IMF, World Bank supporting affected countries' budgets
  • IMF task force looking at impact of high food, fuel prices
  • Around 15 countries talking to IMF about food price problems

IMF Managing Director Dominique Strauss-Kahn said some countries affected by the world food crisis were implementing remedial policies that would be effective.

Food Crisis: IMF Backs Some Policy Responses, Voices Caution on Others

IMF's Dominique Strauss-Kahn at civil society videoconference, with UNICEF Executive Director Ann Veneman (IMF photo)


But, he told a videoconference of civil society organizations (CSOs), other countries' policy responses to the international food price surge are causing concern at the IMF.

Strauss-Kahn told representatives of some 30 northern- and southern-hemisphere CSOs that some countries affected by the crisis are taking sensible steps to cushion the impact and improve agricultural output. These include

    • transfers targeted at vulnerable groups

    • investment in infrastructure, and

    • more access to financing for agricultural investment.

But he cautioned countries against adopting other policies to address the global food price crisis that may have longer-term drawbacks. He warned against some apparently "obvious" food price solutions, such as price and export controls and subsidies.

"I must say that I see some responses that concern us—like price controls, which discourage production; and [controls] on exports, which export hunger from one country to another; and indiscriminate subsidies that help the rich more than the poor and undermine gains made in recent years in reducing poverty and achieving macroeconomic stability," Strauss-Kahn said.

Strauss-Kahn was speaking at a May 23 videoconference involving CSOs from Africa, North and South America, Asia, and Europe that was held at the World Bank's headquarters in Washington D.C. The conference was also attended by UNICEF Executive Director Ann Veneman. Strauss-Kahn identified three priorities in addressing the world's food crisis.

`Feed the hungry'

"The first priority, obviously, is to feed the hungry. The most serious risks are starvation and malnutrition, which will stunt children's development for decades," Strauss-Kahn said. "In the short term we need to get food—and money to buy food—to the most affected places."

It was also important to fully fund the World Food Program, Strauss-Kahn added, urging global CSOs to assist multilateral institutions by urging their governments to do all they can.

Social safety nets

A second priority covered actions needed in the coming six months, Strauss-Kahn said. These included providing additional finance for seed and fertilizer for the next harvest, and at the same time reinforcing social safety nets. The IMF and the World Bank had helped with these objectives both by making some room in budgets for additional spending, and also by providing balance of payments support.

"We at the IMF are already talking with about 15 governments having this kind of problem in front of them," Strauss-Kahn stated. He added that an IMF task force is looking at the impact of high food and fuel prices on different countries' policies.

A third priority was to look at the issues that caused the food price problem. Some sources of the crisis were clear: distortion of global and local agricultural markets that discourage production in low-income countries; some biofuel policies; and high energy prices that drive up the cost of fertilizer and food transport.

Fast-track support

World Bank President Robert Zoellick told the videoconference the Bank is trying to work with some countries to enable them to lower some tariffs and import food more cheaply. "This does sometimes cut into their revenues, and that's where we're working with the IMF on offsets," Zoellick added.

Zoellick said the Bank was trying to put together a global food crisis response program to fast-track financial support for the most vulnerable countries. "We've actually got some packages moving right through our system right now for Haiti, Djibouti, Liberia, we've done some reallocation for Burkina Faso, we're doing some for Bangladesh and Togo; we've got a list of about 15 countries that are most on the edge," Zoellick said.

In a separate interview with IMF Survey online, Mark Plant, Deputy Director of the IMF's Policy Development and Review Department, explains the status of the various strands of work taking place within the IMF on food and fuel prices and their policy implications, and outlines how the IMF is collaborating with the United Nations and other agencies to help relieve the impact.

Comments on this article should be sent to imfsurvey@imf.org