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High food prices cause balance of payments, fiscal problems – IMF
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The International Monetary Fund (IMF) has asserted that there exists a balance of payments and fiscal problem caused by high food prices.
In economics, the balance of payments, (or BOP) measures the payments that flow between any individual country and all other countries. Also, countries track money coming in and going out through the balance of payments.
“Soaring food prices and their impact on hunger, malnutrition and development have threatened to push 100 million people further into poverty and also posed serious threat to the realisation of the Millennium Development Goals by 2015,” it said.
Also, Robert B. Zoellick, the World Bank president said that high food prices were a matter of daily struggle for over two billion people, with no apparent relief in sight.
Back here in Nigeria, the Federal Government recently voted N80 billion for importation of 500,000 tons of rice. The money is to be released from the Natural Resources Fund (NRF). Food prices have been soaring as part of the global food crisis.
Soaring food prices are affecting millions of people across the world - most of all those living on the edge of poverty and hunger.
Current price rises mean that the world’s poorest people will have to spend a larger proportion of their income on food. This may mean they will buy less food, or food that is less nutritious, or they may have to rely on outside help to fulfill their nutritional needs.
In Nigeria, a bag of rice now costs between N10,000 and N12,000 – up from about N5,500 some four month ago. There is a global food crisis affecting countries at different levels.
The FSDH in its earlier review of the economy, “Unbalancing Nigeria’s Growth,” noted that despite the fact that Nigeria has enormous potentials in agriculture the average sectoral share of private sector credits to the sector was 3.43 percent between 2003-2007 and though a large proportion of the country’s labour force is engaged in agriculture, the country cannot boast of feeding itself because the country is predominantly engaged in subsistence agriculture.
In our opinion, the Federal Government should be prudent in its fiscal spending in the face of increased volatility in the international prices of crude oil.
Also, government should put in place measures to ensure the sustenance and enforcement of policies and regulations put in place to stimulate domestic food production. While short to medium term solutions may ameliorate the problem, longer term supply measures are most desirable.
In another related commodities price increase, recently, at the 11th International Energy Forum (IEF) held in Italy, the secretary general of the Organisation of the Petroleum Exporting Countries (OPEC), Abdalla Salem El-Badri, summarised some key findings from the Oil Outlook, presented in OPEC’s background paper for the period up to 2030.
These included: Market speculation which is a major cause of volatility and the rising prices of oil and other commodities; market uncertainty which is undermining the effectiveness of oil investment strategies; rising costs and skill shortages and that the world has enough resources to meet increasing demand for decades to come.
He asserted that volatility continues to have serious impact on the oil market with a persistent upward pressure on prices. Non-fundamental factors have been mainly responsible for this.
The heightened levels of speculation have been a principal driving force behind the volatility, with oil becoming a hedge against the falling dollar. Also, contributing to the volatility are the ongoing geopolitical developments, perceived market tightness and bottlenecks in the refinery sector.
The situation, which has already sparked off social unrest in several countries, is not a temporary phenomenon, but is likely to persist for several years, Zoellick said.
Strong demand, change in diet and the use of biofuels as an alternative source of energy have reduced world food stocks to a level bordering on an emergency, he says. Speaking before the bank's spring meeting last month, Zoellick said the 185-member World Bank would work with other organisations to deal with the crisis by seeking ways to help farmers, especially in Africa , to increase productivity and improve access to food through schools or workplaces.
"This is not a this-year phenomenon," he said, referring to the price spike. "I think it is going to continue for some time."
Zoellick said bank forecasters looking at food prices have concluded that a serious risk exists of a significant increase in poverty, which for some countries will reverse gains made over the past five to 10 years.
In economics, the balance of payments, (or BOP) measures the payments that flow between any individual country and all other countries. Also, countries track money coming in and going out through the balance of payments.
“Soaring food prices and their impact on hunger, malnutrition and development have threatened to push 100 million people further into poverty and also posed serious threat to the realisation of the Millennium Development Goals by 2015,” it said.
Also, Robert B. Zoellick, the World Bank president said that high food prices were a matter of daily struggle for over two billion people, with no apparent relief in sight.
Back here in Nigeria, the Federal Government recently voted N80 billion for importation of 500,000 tons of rice. The money is to be released from the Natural Resources Fund (NRF). Food prices have been soaring as part of the global food crisis.
Soaring food prices are affecting millions of people across the world - most of all those living on the edge of poverty and hunger.
Current price rises mean that the world’s poorest people will have to spend a larger proportion of their income on food. This may mean they will buy less food, or food that is less nutritious, or they may have to rely on outside help to fulfill their nutritional needs.
In Nigeria, a bag of rice now costs between N10,000 and N12,000 – up from about N5,500 some four month ago. There is a global food crisis affecting countries at different levels.
The FSDH in its earlier review of the economy, “Unbalancing Nigeria’s Growth,” noted that despite the fact that Nigeria has enormous potentials in agriculture the average sectoral share of private sector credits to the sector was 3.43 percent between 2003-2007 and though a large proportion of the country’s labour force is engaged in agriculture, the country cannot boast of feeding itself because the country is predominantly engaged in subsistence agriculture.
In our opinion, the Federal Government should be prudent in its fiscal spending in the face of increased volatility in the international prices of crude oil.
Also, government should put in place measures to ensure the sustenance and enforcement of policies and regulations put in place to stimulate domestic food production. While short to medium term solutions may ameliorate the problem, longer term supply measures are most desirable.
In another related commodities price increase, recently, at the 11th International Energy Forum (IEF) held in Italy, the secretary general of the Organisation of the Petroleum Exporting Countries (OPEC), Abdalla Salem El-Badri, summarised some key findings from the Oil Outlook, presented in OPEC’s background paper for the period up to 2030.
These included: Market speculation which is a major cause of volatility and the rising prices of oil and other commodities; market uncertainty which is undermining the effectiveness of oil investment strategies; rising costs and skill shortages and that the world has enough resources to meet increasing demand for decades to come.
He asserted that volatility continues to have serious impact on the oil market with a persistent upward pressure on prices. Non-fundamental factors have been mainly responsible for this.
The heightened levels of speculation have been a principal driving force behind the volatility, with oil becoming a hedge against the falling dollar. Also, contributing to the volatility are the ongoing geopolitical developments, perceived market tightness and bottlenecks in the refinery sector.
The situation, which has already sparked off social unrest in several countries, is not a temporary phenomenon, but is likely to persist for several years, Zoellick said.
Strong demand, change in diet and the use of biofuels as an alternative source of energy have reduced world food stocks to a level bordering on an emergency, he says. Speaking before the bank's spring meeting last month, Zoellick said the 185-member World Bank would work with other organisations to deal with the crisis by seeking ways to help farmers, especially in Africa , to increase productivity and improve access to food through schools or workplaces.
"This is not a this-year phenomenon," he said, referring to the price spike. "I think it is going to continue for some time."
Zoellick said bank forecasters looking at food prices have concluded that a serious risk exists of a significant increase in poverty, which for some countries will reverse gains made over the past five to 10 years.
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