June 02 - 08, 2008

The World Bank has offered financial assistance to Pakistan for the upcoming budget as well as to overcome the prevailing food crisis. The two sides have been geared up to finalize the details before the budget. Pakistan is likely to get $500m from World Bank's Food Crisis Response Funds.

Although the top slot in the new set up looks happy over the deal yet some quarters have shown their reservation over the deal with World Bank as they feel that such loans are usually embedded with conditionality. There expressed concerns that country's external debt has already witnessed a peak of some $44.59 billion dollars during the current fiscal year mainly due to rising current account deficit.

In fact the government has to reduce its foreign debt by 2.5 percent per year and current year it should be 24.5 percent of GDP from 27 percent. It may be mentioned that the government has already borrowed some 5.58 billion dollars foreign debts during the first three quarters of the current fiscal year to meet its around $11 billion current account deficit.

Currently, the slowdown in foreign inflows coupled with declining foreign investment and sluggish privatization process compelled the government to use the tool of borrowing to fulfill is foreign payment requirements.

According to official figures, country's foreign debt has witnessed an upsurge of 14.32 percent or $5.58 billion during the first nine months of the current fiscal year.


Actually, worldwide persisting food crisis has opened an active role of international donor agencies as World Bank has announced funding for food crisis in different regions of the globe.

However, Pakistan's case is visibly different from rest of the lot in view of plenty of land and world's largest irrigation network. These available resources can be capitalized provided leaders managing the country devote their time and efforts to face the wide spread food crisis threatening life of over 2 billion people.

World Bank President Robert Zoellick has announced 1.2 billion in loans and granted financing to help poor countries to cope with soaring costs of fuel and key staple foods. According to World Bank President, these initiatives will help address the immediate danger of hunger and malnutrition for two billion people struggling to survive in the face of rising of rising food prices, and contribute to a long-term solution that must involve many countries and institutions.


In order to provide relief to countries hit by food crisis, envoys from 26 Latin American and Caribbean countries met on Friday last to discuss the rising cost of food and draw up a united policy for the region.

The talks in Caracas, Venezuela, marked the beginning of a week of meetings on the issue, leading up to a three-day UN food crisis summit in Rome.

According to World Bank, global food prices have risen by 83% over the past three years. Lender has announced a package of food grants totaling $1.2bn (608m).

An influential report warned that higher food prices might be here to stay as demand from developing countries and production costs rose.

Prices would fall, but only gradually, the report by the UN's Food and Agriculture Organization and the Organization for Economic Co-operation and Development (OECD) said.


The BBC's James Ingham, in the Venezuelan capital, says that like much of the rest of the developing world, Latin America's poor have not escaped from the increased food prices. Tajikistan is one of the countries identified by the UN as a priority.

While some countries are working together to tackle the crisis, there has been no united response and the meeting will aim to correct that, he says.

At a recent summit held with European leaders, American heads of state pledged to strengthen trade relations. However, an alternative "people's summit" held by social movements said liberalization and deregulation were the principal causes of poverty.

Some of the region's left-wing governments share that view and are focusing on reducing their reliance on imports, creating an agricultural development fund to help achieve this.

In preparation for the UN-sponsored food crisis summit in Rome next week, World Bank said there was "the need for a clear action plan".

As part of its package it is setting aside grants worth a total of $200m for "high-priority" countries most at risk from acute hunger. World Bank says 100 million people could be impoverished by the rising cost and scarcer availability of food.


UN and OECD believe current price spike is higher than previous records, partly due to bad weather ruining crops. But factors such as rising biofuel demand and speculation will keep future costs high, it adds.

Fuel prices have also been rising dramatically and European Union braced for fresh strikes by fishermen. Trade unions say cost of diesel oil has become prohibitively high and that many fishermen are being forced to give up a lifelong profession.