Food and Energy Security and The Economic Crisis

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Food and Energy Security and The Economic Crisis

• The World Bank Group
• Forum Economic Ministers Meeting
• Republic of Vanuatu 28 October 2008

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Impacts of High Food and Fuel Prices

• On the back of unprecedented global economic
  growth, most commodity prices rose steadily from
  2003-4 onwards. During 2008, however, prices for
  crude oil, rice, wheat, copra, palm oil and other
  commodities peaked dramatically
• The dependence of many Pacific countries on
  imported oil and foodstuffs (rice, sugar, flour)
  placed severe pressure on current accounts and FX
  reserves
• Soaring inflation has brought hardship to the
  poor, particularly the urban unemployed and those
  in remote communities dependent on transport and
  imported food

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Impacts of the Current Financial and Economic
Crisis

• An easing in commodity prices good news for net
  importers
  
• A likely reduction in tourism earnings, FDI,
  remittances and overseas employment
  opportunities
  
• For those countries with trust funds invested
  internationally, both asset value and dividends
  will be negatively affected during the economic
  downturn

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What can governments do in the face of such
volatility?

• Fiscal prudence
• Structural reforms that encourage investment
• Energy efficiency and the development of
  alternative energy sources
  
• Food security agriculture and coastal fisheries
• Social stabilizers safety net programs, youth
  interventions, preparing temporary migrants
  

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The Response of Development Partners

• Financial support is available
• Country leadership is key
• Better donor coordination is vital---but will not
  count for much unless governments provide strong
  direction
  
• Donors need to be flexible and fast the quid pro
  quo remains government commitment to adapt and to
  reform