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US Treasury plan paves way for aid to tackle Sri Lanka hunger
Sri Lanka’s desperate poor stand to benefit from a joint action plan initiated by the United States Treasury for a coordinated response to tackle the escalating dangers of global food insecurity.
Under the ‘International Financial Institution Action Plan to Address Food Insecurity’, the Asian Development Bank will repurpose existing commitments of about US$150 million (about Rs 54 billion) to help tackle food insecurity. According to the US-led action plan, the help “may include cash transfer to the poor and vulnerable groups and livelihood development programmes’’ for food and nutrition.
In tandem with this plan, in Berlin on Thursday, under a proposal by Germany’s Federal Development Minister Svenja Schulze, the Group of 7 development ministers launched a Global Alliance for Food Security to tackle the hunger crisis.
Under the US initiative, the ADB is also exploring different options of trade finance and private sector loans to support food imports, the plan shows. The ADB will support Afghanistan and Sri Lanka alongside the Food and Agriculture Organisation and World Food Programme.
The International Fund for Agricultural Development, active in rural areas since the Kirindi Oya project in 1978, will support through the new ‘crisis response initiative’ to address short-term food security needs.
The World Bank Group is readying projects worth US$ 12 billion for the next 15 months, including support to agriculture, social protection to help cushion the income effect of rising food prices, and water and irrigation. South Asia will get US$ 2.4 billion.
The IMF will help countries affected by food insecurity with the full range of its instruments, focusing on its macroeconomic expertise, the plan says.
The ADB’s trade finance guarantees will support essential food imports, where possible, while trade and supply chain finance programmes will provide guarantees to banks for food and agriculture trade transactions involving nearly 2,800 small and medium businesses in 15 developing countries, including Sri Lanka. Agribusiness loans of US$ 450m will be available for nearly 300,000 smallholder farmers in 15 developing countries, including Sri Lanka.
Existing and new trust funds will give immediate financial help to agribusiness and emergency assistance to countries including Sri Lanka, and support ways to strengthen the agriculture value chain.
Hunger is rapidly enveloping an increasing number of Sri Lankan households. Essentials, including rice, wheat flour, powdered baby formula, powdered and liquid milk, and eggs, are scarce and the dizzying cost of staples is eating up static or non-existent incomes, as a result of an economic implosion manufactured by the corrupt political elite who condemned millions to destitution with egregious borrowing and waste.
Fertiliser is also now scarce in global markets and leading producer nations have barred shipments. Prices of ammonia, nitrogen, potash, urea, phosphates, sulphates and nitrates are at record highs. The biggest fertiliser producer, Nutrien Ltd of Canada, announced on its website it will increase potash production by 1 million tonnes to 15m tonnes in 2022.
Having tumbled from lingering crisis to calamity, Sri Lanka was in de facto default.
Sri Lanka suspended payment to creditors, and has earned the dubious honour of becoming the first Asia Pacific country to default in a century, under embattled President Gotabaya Rajapaksa and multiple-time Prime Minister Ranil Wickremesinghe, who claimed in Parliament this week he did not know the actual debt data. Statistics have “gone haywire’, he said, smiling.
Fitch Ratings declared Sri Lanka in default of its debt, a month after the Finance Ministry suspended payment of bonds, commercial debt, and halted external debt servicing on April 12, 2022. The total foreign debt pile is estimated at US$ 51 billion.
Sri Lanka ranks at 65 out of 135 countries in the 2021 Global Hunger index, which measures undernourishment and stunted children among other factors. It is published by Concern Worldwide and Welthungerhilfe. About 500,000 Sri Lankans fell into poverty (less than US$ 3.20 a day, or Rs 1,151) the World Bank estimates.
On April 19, the US Treasury Secretary Janet Yellen gathered multilateral agencies and technical specialists on food security to draw up the action plan. It details policy and operational responses of international financial institutions to address rising food insecurity. Institutions include the African Development Bank, ADB, European Bank for Reconstruction and Development, Inter-American Development Bank, World Bank, the International Monetary Fund, and the International Fund for Agricultural Development.
Dr Yellen told the gathering that export restrictions that could further increase prices should be avoided.
She said worsening global food insecurity was driven by factors underlying vulnerabilities that pre-date the Ukraine war. Recent increases in food insecurity have been driven by conflict, climate change, and economic downturns, such as those linked to the coronavirus pandemic.
She noted that in 2020, the number of people facing chronic food insecurity increased by a devastating 160 million.
Dr Yellen met Finance Ministers of Germany and Indonesia, Christian Lindner and Sri Mulyani Indrawati, who are also finance chairs of the G7 and G20, respectively, as well as Gilbert Houngbo, head of the IFAD, World Bank President David Malpass, and IMF Managing Director Kristalina Georgieva.
For further global emergency food assistance, the United States has raised the allocation since February to nearly US$2.6 billion.
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