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Food and Energy Security and The Economic Crisis

Food and Energy Security and The Economic Crisis. The World Bank Group Forum Economic Ministers’ Meeting Republic of Vanuatu 28 October 2008. Impacts of High Food and Fuel Prices.

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Food and Energy Security and The Economic Crisis

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  1. Food and Energy Security and The Economic Crisis The World Bank Group Forum Economic Ministers’ Meeting Republic of Vanuatu 28 October 2008

  2. 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

  3. 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

  4. 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

  5. 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

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