The head of the International Monetary Fund is warning that spikes in food costs around the world could lead to starvation and the crumbling of governments.
"We are facing a huge problem," Dominique Strauss-Kahn told reporters at the end of weekend meetings of world finance ministers and central bank governors, referring to rapidly rising food prices that have caused hunger and deadly violence in several countries. The IMF is often the lender of last resort for countries in trouble. Prices of wheat and rice have more than doubled in the past year, with rice - a staple in Asian diets - surging by 75 per cent in the past two months, according to the World Bank, the IMF's sister organization.
The IMF and the World Bank wound up two days of meetings on Sunday that dealt with the financial crises roiling global markets and rising food and energy prices. A severe credit crisis could result in losses approaching $1 trillion (euro 630 billion) before it is over, according to an IMF estimate released this week.
Also Sunday, Robert Zoellick, the head of the World Bank, urged immediate action to deal with rising food prices. The international community has "to put our money where our mouth is" and act now to help hungry people, he said. "It is as stark as that." He called on governments to rapidly carry out commitments to provide the UN World Food Program with $500 million (euro315.8 million) in emergency aid it needs by May 1.
Zoellick said the bank was responding to a number of countries with conditional cash transfer programs, providing food at workplaces and seeds for planting in the new season. Elizabeth Stuart, of the international aid agency Oxfam, said that aid levels are going down, not up. "All this concern would look a lot more serious if they delivered the cash they have promised," she said in a statement. "Concern is no substitute for cold hard cash."
Despite heavy security precautions around the IMF and World Bank headquarters in downtown Washington, near the White House, there were few demonstrations.