News Brief No. 02/81

News Brief: IMF Managing Director Köhler and World Bank President Wolfensohn Urge Donor Nations to Commit Critically Needed Food Aid to Southern Africa

August 1, 2002

International Monetary Fund Managing Director Horst Köhler and World Bank Group President James D. Wolfensohn urged donor nations to commit critically needed food aid and financial support to Southern Africa, and underlined their "grave concern" about the food crisis in the region.

"The unfolding food crisis in southern Africa is of grave concern," they stated in a joint letter to the Executive Boards of the IMF and World Bank. "Although the disturbing situation earlier this year has been eased by the new harvest, conditions are expected to deteriorate rapidly over the next few months. Up to 13 million people are likely to require sustained food assistance."

Their joint letter was issued as an appeal to the 24-member Boards of the IMF and World Bank for support in urging member countries of the institutions to deepen commitments to the United Nations' appeal for humanitarian relief for Southern Africa.

UN agencies launched a major appeal on July 18, 2002 seeking humanitarian relief of US$611 million, including US$507 million for food aid, on behalf of the countries in the 14-nation Southern African Development Community (SADC) that are currently vulnerable to severe food shortages. The IMF and the World Bank, in support of the UN initiative, have been actively pursuing ways in which to assist the countries at risk in Southern Africa, and to alleviate the macroeconomic consequences of the evolving food crisis.

The food security situation in Southern African is considered the worst since the 1991-92 drought. Current estimates indicate that the shortfall in cereal crops in six affected countries—Lesotho, Malawi, Mozambique, Swaziland, Zambia and Zimbabwe—may be around 3 million tons this year, which is equivalent in value to about US$750 million. In addition, Botswana and Namibia have been affected by unusual weather patterns that have created substantial localized crop shortfalls, although each is addressing these problems domestically (as is Mozambique).

"We stand ready to support emergency financial assistance to the region, bearing in mind the preference for concessional finance and the heavily indebted position of several of the countries." Mr. Köhler said. "In countries that have IMF-supported programs, we have been discussing possible augmentation of existing loan arrangements to help fill gaps between donor assistance and actual financing needs. We also have resources available which can be put to use under the IMF's Compensatory Financing Facility and Emergency Assistance Facility."

The World Bank is assessing the need for supplemental loans and how existing credits can be reprogrammed to meet Southern Africa's immediate needs.

"We are gratified by the support that the international community is providing to the region, including initial pledges to meet the UN appeal. However, these pledges do not yet cover a significant proportion of the funds that are required," Mr. Köhler and Mr. Wolfensohn stated in their letter. "In asking you now to make a specific and urgent request to aid agencies and development partners of the members of your constituency to deliver additional support through the international appeals, we pledge ourselves to ensure that the Fund and the World Bank, through technical and financial assistance, also continue to play their part in mitigating this humanitarian crisis."