Plea For Aid To Avert Starvation

“Warning that rising food and oil prices pose a crisis for the world's poor, Robert B. Zoellick, the President of the World Bank, is calling on President Bush and other leaders convening in Japan next week [for the G8]… summit meeting to make new aid commitments to avert starvation and instability in dozens of countries. …

Zoellick's letter, obtained by NYT, came with a lengthy study of the impact of rising prices for food, fuel and commodities on the world's poor. …Zoellick said in his letter that the World Bank, the International Monetary Fund (IMF) and the World Food Program (WPF) had short-term needs of $10 billion. …

Zoellick's letter calculates that, for the world's 41 poorest countries, the combined impact of high food, fuel and other commodities is a ‘negative shock’ to their economies, reducing GDP by between 3 and 10 percent, causing ‘broken lives and stunted potential’ for millions. The letter says the trust funds and aid funds set up by the world's richest countries are on the verge of running out of grant money to finance school feeding, mother and child nutrition programs and food-for-work programs. …

He called for three immediate steps to be discussed at the summit meeting. They include supplying sufficient money for a ‘rapid financing facility’ for those needing food aid, and establishing a program to get seed and fertilizers to small farmers, especially in Africa. Zoellick is also calling on more than two dozen countries to ease export bans on food, which he said have contributed to higher prices. …” [The New York Times/Factiva]

Meanwhile Reuters reports that WFP “…Executive Director Josette Sheeran appealed to countries to exempt humanitarian agencies from their export restrictions or taxes so that states with excess food stores could contribute to feeding the world's hungry. ‘As countries deal with the food crisis, more and more are shutting down their markets for export ... It is becoming more and more difficult to buy,” she said, speaking on the sidelines of an African summit in Egypt on Tuesday night. …

Sheeran said 80 percent of WFP funds were now spent buying food in the developing world to feed the hungry in poor countries, and said she considered that ‘a revolution in food aid that is very positive’. But the WFP was now often having to tender for food globally rather than purchasing from the same regions where food was needed, meaning that it had to bring stocks in from much farther away. …” [Reuters/Factiva]

World Bank Oks Funds To Tackle Climate Change

“The World Bank gave the go-ahead at a board meeting Tuesday for the creation of a pair of global investment funds to back developing nations' efforts to curb greenhouse gas emissions and adapt to the effects of climate change.

The Climate Investment Funds, led by Japan, Britain and the US and to be administered by the World Bank, are expected to start with total initial funds of $5 billion and become operational by the end of the year, it said. …” [Kyodo News (Japan)/Factiva]

Reuters adds that “…The approval of the Clean Technology Fund and Strategic Climate Fund comes days before a summit of G8 in Hokkaido, Japan, on July 8 where climate change issues are on the agenda. ‘The G8 is likely to broadly support the establishment of the climate investment funds,’ Warren Evans, Director of the World Bank's environment department, told reporters.

He said the World Bank was counting on an initial $4 billion to $5 billion in donations by G8 nations for the Clean Technology Fund, adding that media reports that $10 billion would be raised for the fund ‘are on the high side. …

He said the design of the funds was agreed in negotiations between ‘a large number of stakeholders’ and financing for projects would be decided by a committee made up of eight donor nations and eight developing countries. Decisions would be made by consensus, he added. …” [Reuters/Factiva]

Dow Jones notes that “…Evans anticipates a couple of additional commitments in the near future, possibly to be announced at the G8 conference in Japan later this month. He said non-G8 countries have also expressed interest in providing funding. …[Dow Jones/Factiva]

New Fund For World's Neediest

“The World Bank's private sector arm on Tuesday launched a new fund it hopes will unlock as much as $5 billion in infrastructure investment for the world's poorest countries. As part of its drive to reach deeper into some of the most forbidding markets, the International Finance Corporation (IFC) will use a pot of $100 million to cover the initial costs of power, logistics, and transport, ports and communications projects. Once a project is shown to be viable, it will be tendered to other investors. …

Working with an initial partner, the IFC fund - known as InfraVentures - will cover start-up costs such as feasibility studies and legal fees. Half of its resources will be devoted to sub-Saharan Africa, with the remainder spread across Latin America and Asia. …

[IFC Vice-President for Sub-Saharan Africa Thierry] Tanoh said the new IFC fund should meet the start-up costs of an initial 25 projects. Each $4 million injection might be expected to yield a project worth a conservative average of $200 million, generating total investments of up to $5 billion. The goal would be for 60 percent of the start-up projects to succeed, he added. …” [The Financial Times (UK)/Factiva]

IMF Warns Of Threat To Poorer Nations

“The rise in food and oil prices could ‘severely weaken’ the economies of up to 75 developing countries, including Pakistan and Indonesia, the International Monetary Fund (IMF) Tuesday said in its first broad assessment of the crisis.

Dominique Strauss-Kahn, IMF Managing Director, warned that some countries were now at ‘a tipping point’ because of the double impact of rising food and oil prices. He said that if agricultural commodities prices continued to rise, even if oil prices remained stable, ‘some governments will no longer be able to feed their people and at the same time maintain stability in their economies’. …

In its assessment of the impact of the commodities crisis, the IMF warned that ‘a prolonged period with prices around or above -current levels will place -serious strains on the balance of payments of many countries’. …” [The Financial Times (UK)/Factiva]

AFP adds that “…A new IMF study, looking at the impact of soaring oil and food costs, said many poor and developing countries will likely have to change their economic policies in response to soaring commodity prices. …The IMF [Food and Fuel Prices—Recent Developments, Macroeconomic Impact, and Policy Responses] report found that poor households are most affected by food price inflation and ‘warned that the share of undernourished (people) in developing countries could rise rapidly above the current 40 percent of total population.’ Energy and food values are still rising and the IMF said its research suggests ‘the problem is worsening.’ …” [Agence France Presse/Factiva]

Reuters notes that “… The IMF has identified 18 countries in sub-Saharan Africa that have been hard-hit by higher prices that will need balance of payments and budget support.

Among these is Liberia … where the impact of higher oil prices on the balance of payments is around 15 percent of GDP, representing nearly all of its international reserves.

Strauss-Kahn said the IMF research underscored the need for a coordinated response by countries, donors and international organizations to tackle the effects of the global price shock. …

Bénédicte Christensen, acting Director of the IMF's African Department, said combined the price shocks have raised the overall import bill in Africa by 2 percent to 3 percent of GDP, threatening to derail economic stability and growth. …” [Reuters/Factiva]

WSJ writes that “…The IMF cited the rapid growth of emerging and developing countries as the ‘main source’ of demand for commodities. The Fund said rising demand and a ‘sluggish’ supply response has been the main driver behind the run-up in oil prices. Financial conditions, such as the weak dollar and low real interest rates, have also likely contributed, it said. The IMF found ‘no compelling evidence’ that commodity trading has affected price trends. …

The Fund found that inflation pressures have built up more than expected since the beginning of the year in developing countries, whose fiscal and balance-of-payment conditions have also worsened. It estimated that a further 20 percent increase in the price of commodities from its April projections … could ‘severely weaken the external position’ of 72 countries. …” [The Wall Street Journal/Factiva]

UN Report Proposes $10 Billion World Disaster Fund

“The UN proposed on Tuesday a $10 billion global fund to help poor countries cope with natural disasters the world body said were occurring with ever more frequency and ferocity. A UN report on factors creating world economic insecurity said the existing response to floods and earthquakes of emergency appeals and voluntary contributions should be boosted with a permanent facility, possibly under UN auspices. …

‘A global disaster mechanism ... needs to be established,’ that would not just tackle immediate relief needs but also invest in longer-term disaster reduction, said an overview to the report by Sha Zukang, UN Under-Secretary-General for Economic and Social Affairs (UNDESA). …The 202-page survey, entitled Overcoming Economic Insecurity, also looked at threats to poor countries from world financial turmoil, which it blamed on policies by rich countries of letting market forces take their course. …” [Reuters/Factiva]

AFP adds that “…While economic insecurity is felt most sharply in the poorest countries, developed countries have also been hit hard by ‘rising inequality, indebtedness and the squeezing of social provisioning,’ the report said. It urged narrow pendulum swings of economic cycles, reducing dependence on debt and finance instruments for economic growth, and tailoring macroeconomic policies to development priorities.

The survey also pointed out that the practice of setting aside massive foreign reserves as a form of self-insurance was costing developing countries $100 billion a year. It recommended placing foreign reserves in more productive foreign wealth funds, and especially using these funds to invest directly in development projects in other developing nations. …” [Agence France Presse/Factiva]

AP reports that “…It lists 35 nations that need help because of a food crisis, led by Iraq, Zimbabwe, Swaziland, Somalia and Lesotho, where food insecurity is greatest because of drought and windstorms or floods and, in some areas, fighting. …” [The Associated Press/Factiva]

Also In This Edition… Briefly Noted…

African leaders and international development bodies launched a roadmap on Tuesday to achieve the UN's Millennium Development Goals (MDGs), calling on donors to stump up promised aid. The report, described as a landmark consensus on how to achieve the MDGs in Africa, was released on the final day of an African Union summit in the Egyptian resort of Sharm el-Sheikh. [Agence France Presse/Factiva]

Abu Dhabiis to develop nearly 30,000 hectares of farmland in Sudan in the first step towards ensuring food security in the emirate. The move follows several similar projects by Middle Eastern countries that are locking up land from Brazil to Pakistan and Thailand to try to guarantee supplies of cereals, meat and vegetables at a reasonable cost. [The Guardian (UK)/Factiva]

The World Bank approved two credits totaling $450 million to support the Federal and State Governments of Nigeria in the fight against rural poverty. The board of the bank, in a statement said it approved $250 million for FADAMA III and $200 million for the Community and Social Development project. [This Day (Nigeria)]

Portugalon Tuesday cancelled more than $390 million in debt owed by Mozambique and agreed to a separate loan to help key sectors of the African country's economy, officials said. [Agence France Presse/Factiva]

Aid for Haiti is falling short as the Caribbean country is buffeted by urgent needs to help feed its poor while developing domestic food production and jobs, UN permanent coordinator in Haiti Joel Boutroue said on Tuesday. [Reuters/Factiva]

Vietnam's Central Bank shouldn't use up its supply of dollars with intervention because the black market rate for the dong won't converge with the official one until the currency trades freely, World Bank Lead Financial Economist Noritaka Akamatsu said in an interview. [Bloomberg]

The number of Indonesian poor people fell by 2.21 million between March 2007 and March 2008, the Central Statistics Agency (BPS) has said. This is the second yearly decline in a row as poor people in March 2007 were 2.13 million fewer compared with the year before. [Xinhua/Factiva]

UN Coordinator of Relief Efforts, John Holmes called Tuesday for a new international plan for Afghanistan. He warned that humanitarian problems were getting worse as a result of soaring food prices, declining security and increasing civilian deaths. [The New York Times/Factiva]

Hospitals in Bulgaria should not be closed but restructured and public-private partnerships in the sector need to be developed, World Bank expert Patrick Mordelet said Tuesday at a seminar opened by Health Minister Evgenii Zhelev. The seminar on "Development of a Plan for Restructuring of Hospital Care in Bulgaria" is organized by the Health Ministry with participation of experts from the World Bank and Credes Groupe Burgeap Acodess, France. [Bulgarian News Agency/Factiva]

A government commission will meet today to decide on the reform of Spain's development assistance loans. The commission is chaired by Vice President Fernandez de la Vega, and composed among others by the Ministers of Economy and Foreign Affairs, as well as the State Secretaries for Development Cooperation, Leire Pajin and Economy D. Vegara. A press conference is scheduled for this afternoon to share the conclusions of the meeting. [Europa Press/Factiva]

World demand for oil should continue to climb, despite the doubling of oil prices and weakening economic growth, according to a report released Tuesday by the International Energy Agency. That should mean tightening supplies, decreasing the odds that drivers will get much relief at the gasoline pump. [The New York Times/Factiva]

International Energy Agency Executive Director Nobuo Tanaka said Tuesday he would press G8 leaders at a summit next week to adopt commitments to energy efficiency measures as part of the fight against climate change. We are recommending that energy efficiency is one of most cost-effective ways for consumer countries, he told AFP on Tuesday on the sidelines of the World Petroleum Congress in Madrid. [Agence France Presse/Factiva]

The world is enjoying a green energy gold rush, the UN Environment Program (UNEP) said Tuesday as it published a report outlining a 60 percent hike in investment in renewable energy in 2007. The UN study, published in Nairobi, said more than $148 billion of new funds were ploughed into the quest for cleaner energy last year. [Agence France Presse/Factiva]