World Bank Chief: We're One Shock Away From Full-Blown Crisis

by: SA News Team

by Heather Scott

WASHINGTON (MNI) - As the world's top finance officials focused on policing global imbalances and financial supervision, the World Bank Saturday raised the alarm on rising food prices, warning that many millions more could be pushed into poverty if prices rise further.

"We are one shock away from a full blown crisis," World Bank President Robert Zoellick said of the rising food and fuel prices and the impact on the least developed economies, warning of the vulnerability of these countries to weather or other events.

The financial crisis has shown that "prevention is better than cure. We cannot afford to forget that lesson," Zoellick said at a briefing following a meeting of the bank's governing Development Committee. He called for action from rich nations saying 44 million have fallen into poverty due to food price increases over the last year, and another 10% rise could push 10 million more into poverty. The global community now must "press ahead to see real action" by the Group of 20.

Some have questioned effectiveness of the G20, but Zoellick said, "the best antidote to scepticism is action." He referred to meetings in June of G20 agriculture ministers to address the issue.

The Development Committee said in its communique, "We are concerned about high and volatile international food prices and their impact on vulnerable populations, as well as the longer term risks they pose to growth and poverty reduction."

Zoellick warned that food stocks are low, leaving poor nations especially vulnerable to additional shocks.

"This is the biggest threat today to the world's poor, where we risk losing a generation." The communique also cautioned that recent events in the Middle East and North Africa "will have lasting social and economic impacts." Bahrain Finance Minister Ahmed al-Khalifa, who chaired the meeting, said the Development Committee "urged the bank to be ready to engage at an early stage conflict-afflicted countries."

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