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Liberia: IMF Tackles Rising Prices
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The Analyst (Monrovia)
1 May 2008
Posted to the web 1 May 2008
Commerce Minister Frances Johnson-Morris told lawmakers a fortnight ago that fuel and rice prices would continue to rise in Liberia because they were triggered by world market forces that are outside the control of the Liberian government.
When she addressed the nation this month, President Johnson-Sirleaf reiterated Liberia's impotence in controlling those prices, beside dropping taxes and port levies.
But now, it seems the picture may not remain bleak for long as the global financial watchdog, the International Monetary Fund (IMF), is consulting with policymakers in poor countries to design shock-absorber solutions for the food crisis. The Analyst Staff Writer has been gathering information on the Fund's new initiatives and global concerns.
An IMF Survey online dispatch, Monday this week, said the IMF is working with vulnerable member countries to make a general, and then country-specific assessment of the fiscal, balance-of-payments, and income effects of higher food prices and of higher commodity prices.
The Fund, the dispatch said, is attacking the global hike in food prices price from four fronts including upfront additional financial support to poor affected countries in Africa, policy harmonization, working with exporters, and coordinating with other agencies responsible for the global movement of food.
"Several countries," the dispatch said without naming names, "have asked for extra financial support to cover higher food import costs, and an IMF mission will shortly travel to Haiti to review the country's need for increased financial assistance."
Liberia looms large amongst counties in sub-Saharan Africa that rely heavily on imported rice, to say nothing about petroleum products.
There is desperate fear amongst Liberians that unless the government designed quick solution to rising consumer prices, the nation risks a nosedive into social unrest or upsurge in violent crimes surpassing the current spate of armed robbery. Liberia is currently playing host to Africa's largest ever peacekeeping force and millions of refugees from neighboring Sierra Leone, Guinea, and Cote d'Ivoire.
President Johnson-Sirleaf said during her April 13 nationwide address that her administration has considered plans to boost agro production in collaboration with Chinese investors and local farmers.
She did not say how soon the plans will be launched or to what extent it was prepared to handle Liberia's perennial food shortage exacerbated by 14 years of war and the threatening rise in rice prices.
Whether it is part of her agro boost short-term solution to ask for extra financial support to cover higher food import costs as Haiti has done is also not clear.
What analysts say is clear is that Liberia, as a poor member of the IMF readmitted to the group on the strength of its Interim Poverty-Reduction Scheme (IPRS), could use the Fund's rush to tackle the global rise in food prices as a stepping stone to nip possible domestic food-related violence in the bud and save the country another spate of bloodbath.
The IMF Survey online dispatch say the Fund is exhausting all available options in reaching out to poor countries in Africa and will do everything possible to assist those countries that are committed in policy to save their another round of hardship and poverty.
In this regard, according to the dispatch, countries that have standardized poverty reduction policies and programmes to match those policies may receive priority cooperation.
External Relations Department Director, Masood Ahmed, told an April 24 news conference that the IMF is also 'working with the member countries that are likely to be affected to assess the impact of the higher food prices and of higher commodity prices more generally, on their balance of payments and fiscal situation'.
"The impact of food price increases on the most vulnerable populations, notably the urban poor, has significant social implications-as attested by recent food riots and strikes in several African countries.
Many sub-Saharan African countries have resorted to emergency measures in response to a food price situation that is still evolving," Ahmed reportedly told the press conference.
IMF research, the dispatch said, shows that higher prices for food pose new challenges for African policymakers, in particular, and could have especially adverse effects on the poor because food represents a larger share of what poorer consumers buy.
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About 10 countries, mostly in Africa, have raised with the IMF the possibility of augmenting their existing arrangements under the Poverty Reduction and Growth Facility (PRGF) to provide for additional financing to cover the import costs associated with higher food prices.
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