ADB pledges support for Asia’s hardest-hit countries

By Lalin Fernandopulle

lalin @sundayobserver.lk
 

The Asian Development Bank (ADB) will allocate US $ 500 million as immediate budgetary support to tackle rising food costs in the Asia-Pacific region and pledged to double the lending to US$ 2 billion for agriculture in 2009.

The ADB is planning to lend US$ 1 billion this year to the agriculture and natural sector and will double the lending next year as support for Asia’s hardest-hit countries.

The assistance is to help governments alleviate the fiscal burden and bring food to the table of the most vulnerable and needy. The resources could be used to import food, grains and agricultural inputs such as fertiliser.

When contacted ADB Country Director Richard Vokes said the ADB will continue to monitor the situation in Sri Lanka in cooperation with the government and other development partners.

“While the present crisis has refocused attention on food security, it is also important that the costs and benefits of various policies and investment options to tackle the crisis are carefully analysed to ensure that they contribute in a sustainable way to develop the sector and the country,” Vokes said.

Meanwhile, the ADB report on Soaring Food Prices-Response to the Crisis stated that the rising food prices threaten to reverse the gains in poverty reduction in the Asia and Pacific region, undermining the global fight against poverty.

The report said that the situation demands an early response from governments with targeted programs that provide direct assistance to the poorest, the most vulnerable and policy measures that support open trade and distribution of basic commodities across the region.

The report said that ADB’s short-term assistance include targeted interventions to protect the food entitlements of the most vulnerable groups and income and livelihood programs for the poor to mitigate the impact of the crisis.

In its long-term assistance to the agricultural and natural resources sector, the bank seeks to enhance productivity, improve market access and deepen reforms.

Soaring food prices have eroded the purchasing power of over a billion poor in Asia, increasing their food deprivation.

The food crisis has stoked inflation and reduced fiscal space in many countries, increasing the risk of high inflation, interest rates and slow down in economic growth.

“If the food prices continue to rise the Millennium Development Goals to be attained by 2015 will be jeopardised,” the report states.

Although food grain prices declined during the 1990’s, a reversal took place in 2000 and therefore prices have been rising with a sharp upturn from mid 2007.

During the year wheat export prices increased by 130 per cent, rice by 98 per cent and maize by 38 per cent.

Domestic prices doubled in Bangladesh and Cambodia and increased by 70 per cent in Afghanistan, 55 per cent in Sri Lanka and 40 per cent in the Philippines.

The adverse weather conditions, rise in fuel prices, increase in consumption in India and China and the use of grains for the manufacture of bio-fuel are reasons cited by experts for the sharp rise in world food prices.