IMF denies culpability in Malawian food shortages

The International Monetary Fund (IMF) on Tuesday continued to deny culpability in Malawi's decision to sell strategic maize reserves just before a crop failure and widespread food shortages. ActionAid, a leading NGO in the Southern African country, said it would release a policy brief on Thursday "showing aid conditionalities and bad directives from the IMF played a role in the famine and death at the beginning of this year", French News Agency, AFP reported. President Bakili Muluzi declared a state of disaster in February and has asked for US $21 million in international assistance for food relief. Close to three million people or 28 percent of the population are in need of emergency assistance and more than 300 people are reported to have died of hunger this year. The IMF representative in Malawi, Girma Begashaw, countered allegations that the financial institution was partly to blame for the current crisis: "There appears to be a concerted effort to discredit the work of the IMF in Malawi. Once again, we did not instruct the Malawi government or the NFRA (National Food Reserve Agency) to sell the grain reserves." "In fact, we do not have any expertise in the agricultural sector or [in] food security policy. It is like asking the IMF to operate on a heart. How can we do this when we have no knowledge in this field?" he asked. The accusations are the most recent following comments by the country's Finance Minister, Friday Jumbe, who told Reuters last week that the government had been urged by the IMF and other donors to settle commercial debts by selling reserves. Agriculture Minister Aleke Banda told the BBC's World Business Report: "International donors have argued that we do not have to keep reserves at those (high) levels." ActionAid also points out that private traders benefited from the sale of the grain reserve, saying that many commercial traders bought and hoarded maize until prices rose before selling it at exorbitant prices. Begashaw said that the country had cut the grain reserve by two-thirds after the advice of a European Union consultant. He said: "The problem is largely because of inaccurate crop estimates. They thought they would have a bumper crop in 2001, so they went ahead and sold all the 167,000 mt in the reserve. "They did not even keep the 60,000 mt that their own policy required them to keep and are now looking for someone to blame for the situation." According to a joint assessment by the World Food Programme and Food and Agricultural Organisation, the current food crisis is largely due to poor weather and rising food prices in a country that has an inflation rate of 22 percent. Interest rates have risen to 46 percent. A rise in food prices has robbed already poor people of the ability to buy enough food to meet their needs. The price of the staple food, maize, rocketed by more than 400 percent in March this year compared with the same period in 2001. The present food crisis couldn't have come at a worse time for one of Africa's poorest countries struggling to improve its relationship with international donors. Two of it's largest donors, Britain and Denmark, this year announced they would suspend aid because of "government over- expenditure and a lack of fiscal discipline". Despite the food shortages, the IMF has suspended Malawi's poverty-reduction programme until the government cuts spending. The release of the ActionAid Policy Brief and Report in Washington coincides with the gathering of world leaders in Rome for the World Food Summit. One of the divisive issues at the summit was trade, with advocacy groups saying poor, developing world, farmers were disadvantaged by international trade policies. Trading practices apparently designed to open markets have instead put farmers out of business in the developing world because they cannot compete with subsidised imports from the United States and Europe, they say. UN High Commissioner for Human Rights, Mary Robinson, called it "unanswerable" that developing countries were facing trade barriers that exacerbate the problem of world hunger. She noted, with "regret", the lack of top-level representation from richer states. Only two of the 29 member nations of the Organisation for Economic Cooperation and Development were represented by heads of government at the four-day summit.