THE World Bank has called on countries to lower trade barriers to encourage the production of food, energy and fertilizers to prevent millions of people from joining the ranks of the poor and going hungry.
In a briefing, World Bank Group President David Malpass expressed concern that countries have imposed quotas, high import tariffs, high export tariffs and bans export amid the ongoing pandemic and war in Eastern Europe.
Malpass said the World Bank provides $17 billion a year to boost food security. But the international community, he said, should step up its efforts.
“Countries must act now to encourage the production of food, energy and fertilizer. The production line needs all three. It is vital for countries, both advanced and developing, to lower their trade barriers,” said Malpass.
Malpass said the World Bank Group board will discuss a 15-month crisis response of about $170 billion. The answer will cover the period from April 2022 to June 2023.
The bank plans to commit $50 billion of that amount over the next three months. This will also be complemented by the $93 billion that the International Development Association (IDA) will begin disbursing to the poorest countries by July 1.
Malpass also said the World Bank Group had increased its climate financing and technical support to more than $26 billion in fiscal year 2021, the highest in the institution’s history.
Debts and inflation
Apart from these, Malpass said, another major concern is the growing debt of countries and the rapid increase in inflation in many countries.
He said 60% of low-income countries are in debt distress or at high risk. At a recent meeting, Malpass said, suggestions on how to expand the common framework were made.
These suggestions included, among others, suspending debt service and penalty interest payments as well as expanding eligibility under the Common Framework.
The Common Framework was created by the World Bank Group and the International Monetary Fund (IMF) and “provides a structure to guide eligible countries’ debt treatment agreements”.
A World Bank document said: “It aims to provide debt treatments – including deep debt reductions if needed – to eligible countries under the DSSI (Debt Service Suspension Initiative) “.
On inflation, Malpass called on central banks to use other monetary policy tools at their disposal to fight inflation. These tools, he said, should not be limited to adjusting interest rates.
Malpass said some of these tools include shortening their portfolio duration; encourage supply through their regulatory policies; and provide forward-looking guidance that promotes monetary stability.
“Central banks need to use more tools under current policies. The inequality gap has widened dramatically, with wealth and income becoming concentrated in narrow segments of the world’s population. Interest rate hikes, if that is the primary tool, will add to the inequality challenge the world faces,” Malpass said.
Earlier, World Bank economists warned countries against imposing price controls and restrictions on food exports to stop rising domestic food prices.
In a blog post, World Bank economists Clemens Graf von Luckner and Kathryn Holston and World Bank Group Senior Vice President and Chief Economist Carmen Reinhart said food prices had risen since the start of the pandemic.
Economists have also sounded the alarm that the Ukraine-Russia war, the first war in Europe since 1945, has also contributed to rising food prices. Some countries have experienced an increase in food inflation above 4%.
Economists said the 2008 food crisis was made worse by restrictions imposed by a third of all emerging market and developing countries (EMDEs).
However, from the pandemic until the start of the Russian-Ukrainian war, the EMDEs implemented these policies. One caveat, economists said, is the difficulty of removing those policies that could lead to greater economic “distortions.”