Headlines For Monday, June 16, 2008
G8 Underscores The Risks From Rising Commodity Prices.
“Finance ministers from the G8 leading nations who gathered in Osaka over the weekend focused on the high cost of commodities, notably oil and food, which they warned could undermine economic growth and stir up inflation. They refrained from commenting on foreign-exchange rates in their final joint statement. …
Ministers reiterated their commitment to strengthening the financial system to prevent a replay of the financial crisis that nearly a year ago saw fallout from problems in the US subprime-mortgage market ripple throughout financial markets and economies. …
Ministers urged producers to ensure more oil makes it onto the market. Even as they look to make it easier to secure cost-efficient fuel, the ministers said they were committed to leading the charge on climate change and would strengthen efforts to aid developing countries in that regard, including through climate investment funds. …” [The Wall Street Journal (06/16)/Factiva]
FT writes that “There are no quick fixes to soaring oil and food prices, G8 Finance Ministers concluded on Saturday…Under pressure from some ministers, …the G8 agreed to commission a study from the International Monetary Fund (IMF) to look into the impact that speculation might be having on tight oil supplies. …” [The Financial Times (UK, 06/14)/Factiva]
Xinhua notes that “…Calling for urgent and concerted action, the G8 Ministers stress strengthened efforts to assist developing countries in addressing climate change, and put forward concrete measures in the ‘G8 Action plan for Climate Change to Enhance the Engagement of Private and Public Financial institutions’. In support of African development, the Finance Ministers proposed improving the investment climate and strengthening the financial sector, which were termed as two pillars in ‘G8 Action Plan for Private Sector Led Growth in Africa.’ …” [Xinhua (06/14)/Factiva]
In a separate piece, FT reports that “The world's banks and financial regulators are ‘on track’ to complete the initial implementation of financial system reforms, Mario Draghi, the governor of the Bank of Italy and chairman of the Financial Stability Forum, said at the weekend's meeting of the G8 finance ministers in Osaka.
Draghi said a ‘fragile stability’ had returned to markets, commended big banks on the improved transparency of their financial reporting and added that regulators would provide new guidance on liquidity and accounting standards within the 100-day deadline the G7 had set in April. [The Financial Times (UK, 06/15)/Factiva]
AFP writes that “…The G8 powers said in their communiqué ‘we recognize the benefits of commercially-driven investment from government-controlled investors such as sovereign wealth funds,’ encouraging them to work with the IMF to improve transparency. The statement said the funds and the IMF could work together to ‘identify and adopt high standards’ in other areas too, such as governance and the management of risk. …” [Agence France Presse (06/14)/Factiva]
Kyodo News reports that “Developing economies that attended the G8’s meeting in Osaka hailed Saturday the initiative led by some major industrialized countries to set up international investment funds to help battle climate change. Representatives from countries including China, Thailand, Brazil and South Africa threw their weight behind the efforts to establish the Climate Investment Funds led by Japan, the US, Britain and the World Bank, while also calling for strengthened commitment from advanced economies in order to fight global warming. …” [Kyodo News (Japan, 06/14)/Factiva]
World Bank President To Visit Russia
‘World Bank President Robert Zoellick arrives in Russia on Monday. The World Bank’s press service said he plans signing a memorandum of understanding between the World Bank Group and the Russian Bank for Development and Foreign Economic Activity (Vneshekonombank). …
The deputy director of the international financial relations department at the Russian Finance Ministry, Andrei Bokarev, told reporters on Sunday that a number of matters of current cooperation would be discussed with Zoellick in Moscow. For example, their cooperation with the World Bank …consultative services and work on the regional level.” [ITAR-TASS (Russia, 06/16)/Factiva]
Ria Novosti notes that “Russian President Dmitri Medvedev has given his support for World Bank initiatives for resolving the financial and world food crises, reported the RIA Novosti correspondent on Monday. The World Bank must respond to global problems, such as financial and food crises. ‘The series of initiatives that you have formulated is very interesting to us, said Medvedev at a Kremlin meeting with World Bank President Zoellick’, on a 24-hour visit to Moscow. [RIA Novosti (Russia, 06/16)/Factiva]
In a separate piece, ITAR-TASS adds that “…The question of Russia’s early repayment of its debt to the World Bank will hardly be raised before the end of this year, Bokarev said. …
According to the latest estimations of the Finance Ministry, the possible savings through the early repayment of the debt are not obvious, Bokarev said. …” [ITAR-Tass (Russia, 06/16)/Factiva]
Saudi ArabiaTo Increase Daily Crude Output By 200,000 Barrels: UN Chief
“UN Secretary General Ban Ki-moon said on Sunday that Saudi Arabia had pledged another crude output increase in July to meet rising demand in the world market. Saudi Arabia, the top producer of the Organization of the Petroleum Exporting Countries (OPEC), has promised to raise its daily output by 200,000 barrels in July, Ban said after a visit to the country. …” [Xinhua (06/16)/Factiva]
Kyodo News writes that “…Saudi Arabian Oil Minister Ali al-Nuaimi unveiled the plan in a meeting with Ban, according to the reports. …The Saudis will host a meeting of crude-producing and consuming nations in Jiddah on June 22 to discuss how to control soaring prices. …” [Kyodo News (Japan, 06/16)/Factiva]
FT notes that “Saudi Arabia is considering boosting oil production to its highest in more than 25 years to help bring down record prices and ease political pressure from the US and other developed countries. …” [The Financial Times (UK, 06/16)/Factiva]
AFP reports that Ban said “… ‘The Saudis did increase production in June by 300,000 barrels. For the month of July, it will be an increase of 200,000 barrels more in response to requests from customers,’ Ban said, citing his conversation with [Saudi Oil Minister] al-Nuaimi. …But Ban also quoted al-Nuaimi as saying that he felt oil-consuming countries should also play their part to stabilize prices by bringing down national taxes and combating speculators. …” [Agence France Presse (06/16)/Factiva]
Inflation Weighs Heavily On Asia's 'Growth Story'
“An Asian Development Bank executive called on governments to tighten monetary policies to deal with the threat to growth posed by spiraling inflation.
The bank is reviewing its growth forecast of 7.6 percent this year for the Asian region, excluding Japan, amid concerns that inflation will widen income inequality and cause more people to plunge into poverty, Managing Director General Rajat M. Nag said Sunday at the World Economic Forum (WEF) on East Asia in Kuala Lumpur. Among the countries worst hit is Vietnam, where inflation is more than 25 percent. Singapore, Thailand, India, Philippines and Indonesia are looking at inflation rates of 7.5 percent to 11 percent. …” [The Wall Street Journal Asia(06/16)/Factiva]
Kyodo News adds that Nag “… listed inflation, inequality and the ‘infrastructure deficit’ as the most pertinent problems facing Asia now. …But while challenges remain with Asia, it is still the region with the fastest growth pace, and the high demand for consumer goods and services, especially from India and China, could help alleviate global slowdown. …” [Kyodo News (Japan, 06/15)/Factiva]
Reuters notes that “…James W. Adams, the World Bank's Vice President for East Asia and Pacific, [said] that …. [w]hen you have price stability you actually have more flexibility in terms of what instruments you can use and how aggressively you have to use them,’ Adams told reporters.
‘The other concern is that inflation is a tax on the poor,’ he said. ‘The risk is because they are so heavily dependent particularly on the food budget, that this will reduce the prosperity and wealth of a significant percentage of the population.’ …” [Reuters (06/15)/Factiva]
Sri Lanka To Get $900 Million From World Bank For Regional Growth
“Sri Lanka could get $900 million from the World Bank over the next three years to build infrastructure in lagging regions, improve health, education and safety nets, the multilateral lender said.
The World Bank's Executive Directors had endorsed a country assistance strategy (CAS) covering the period from July 2008 to June 2011… The program will expand economic opportunities in lagging regions by rehabilitating roads, irrigation networks, and water supply and improve the investment climate and competitiveness to encourage private sector investments, the World Bank said.
It will also improve the quality services and accountability to improve education, health, social safety nets, and environmental protection. …The strategy was developed after consultations with the government and a broad cross section of Sri Lankan society, the lender said. The International Finance Corporation (IFC)… will also help second tier small businesses during the three year period. …” [Asia Pulse (Australia, 06/16)/Factiva]
Meanwhile Reuters notes that “Sri Lanka's Central Bank said it had raised $150 million through a syndicated loan to finance state infrastructure projects in 2008… The loan will be provided by a consortium of major international banks and will contain a ‘green shoe option’, the Central Bank said in a statement late on Thursday. This option will give the government some flexibility to raise the loan to $250 million, depending on investor appetite. …” [Reuters/Factiva]
Also in this Edition: Commentary: Global Food Crisis: Latin America Has Both Abundance And Want and Briefly Noted...
Commentary: Global Food Crisis: Latin America Has Both Abundance And Want. A commentary by World Bank Vice President for Latin America and the Caribbean Pamela Cox published in daily The Miami Herald writes: “As world leaders left the Rome summit with plans to aid the world's poor struggling with record food prices, it is important to consider some unique characteristics of Latin American and Caribbean countries. High commodity prices present an opportunity for the region to increase food supply while confronting the urgent challenge to help those most in need during this crisis.
Latin American and Caribbean countries face a critical paradox. On the one hand, the region has a rich agricultural tradition, and several countries are among the world's largest food exporters. … For commodity-rich South American countries, this development presents an opportunity for sustained growth through a shift to value-added production, from raw materials to agro-industry. This in turn will have a positive impact on employment and will complement the transformations in countries such as Colombia, Chile and Peru, which have become world-class producers of fruit, asparagus, avocados and other specialty vegetables.
However, some countries, especially in Central America and the Caribbean, are in a very different situation. They must rely on food imports and are severely hurt by the food-price spiral. At the same time, they are experiencing terms of trade losses associated with the prices of nonagricultural commodities. Food-price inflation affects different groups in different ways. It disproportionately affects poor urban consumers in all countries, including food exporting countries. …
In 2007, the Latin America and Caribbean region marked a fourth straight year of growth in excess of 5 percent - its healthiest spurt since the 1970s. …Poverty rates… have fallen in several countries from Brazil to Peru, Argentina and Mexico. …. These gains are now at risk due to the impact of the economic slowdown in the US as well as rising fuel and food prices. The challenge is daunting, particularly for the smaller countries, even if the region is better prepared and less vulnerable than in the past.
Meanwhile, the world's industrialized countries can contribute to easing the food crisis by creating some breathing space through easing subsidies, mandates and tariffs on corn-based bio-fuels. … Cutting ethanol tariffs in the US and Europe would boost production of more efficient sugarcane bio-fuels … that do not compete with food production and would expand markets for poorer countries. Concluding the Doha World Trade Organization deal to remove agricultural subsidies and tariffs would establish a more-level playing field that will benefit consumers all around the world. …
The challenge in Latin America today is to sustain growth, while facing the new global and regional conditions. Latin America has the potential and will certainly overcome this new test. Together with the UN and other partners, the World Bank will continue to support countries in their efforts to build a safety net for the most vulnerable and at the same time continue to create economic and social opportunities for all.” [The Miami Herald (US, 06/15)/Factiva]
Briefly Noted… Strengthening collaboration and integration across Africa is a major stepping-stone toward the continent's meaningful integration in the global economy and a critical building block for stronger growth and poverty alleviation. That is the main message of the Regional Integration Assistance Strategy (RIAS) for Sub-Saharan Africa, presented to the World Bank Board of Directors earlier and the first of its kind at the Bank. [Xinhua (06/15)/Factiva]
The Africa Progress Panel (APP), a watchdog set up to monitor the widely lauded commitments made at the 2005 summit, whose members include Tony Blair, Kofi Annan, Bob Geldof and Nelson Mandela's wife, Graca Machel, will tomorrow reveal that foot-dragging by Western countries is not only derailing efforts to boost African economies, but is also in danger of reversing more than a decade of progress that has seen people being lifted out of poverty and health services and education noticeably improving. [The Observer (UK, 06/15)/Factiva]
Donors to Mali, meeting Thursday and Friday in Bamako, pledged to lend a total of $6.4 billion over the period 2008-2012. [Xinhua (06/14)/Factiva]
African ministers gathered in Kenya Monday to discuss food security as the world's poorest continent reels from a global food crisis triggered by surging energy and commodity prices. The 25th Food and Agriculture Organization (FAO) Regional Conference for Africa, taking place in Kenya until Friday, is to discuss ways of boosting agriculture and food security, such as by improving water management. [Agence France Presse (06/16)/Factiva]
The World Bank has released about $127 million to fund programs within the framework of ongoing efforts to end Cote d'Ivoire crisis, according to official sources. The funds, which have already been disbursed, will be used to fund both the process to end the current crisis and but also post- crisis reconstruction programs in Cote d'Ivoire, the World Bank said in a statement published Friday. [Xinhua (06/14)/Factiva]
The president of Indonesia has appointed Finance Minister Sri Mulyani Indrawati to take on the additional post of Chief Economics Minister, the cabinet secretary announced over the weekend. Indrawati had been widely mentioned as likely to fill the vacant position after the former chief economics minister, Boediono, was named the new central bank governor in April. [The International Herald Tribune (06/16)/Factiva]
One of the best ways to reduce corruption in social, political and trade institutions is to have more community driven projects where the community monitors projects and delivers where stringent law fails, World Bank [official]Christian Kammer said Friday while addressing the 2nd Annual Anti-Fraud Conference in Mumbai. [Indo-Asian News Service (06/13)/Factiva]
Chinahas now clearly overtaken the US as the world's leading emitter of climate-warming gases, a new study has found. The increasing emissions from China accounted for two-thirds of the growth in global greenhouse gas emissions in 2007, the study found. The report, released Friday by the Netherlands Environmental Assessment Agency, is an annual study. Last year, for the first time, the researchers found that China had edged ahead of the United States as the world's leading emitter. [The International Herald Tribune (06/14)/Factiva]
Kosovo's constitution took effect Sunday; EU officials say the constitution turns a new page and that they can this week start taking over key duties such as policing and justice from the UN. [The Financial Times (UK, 06/16)/Factiva]