WWashington, April 13 (IANS) India
Sunday called for a thorough overhaul of the global system of financial
oversight and regulatory mechanisms to save the developing world from an
economic crisis not of their making.
Addressing the World Bank-International Monetary Fund (IMF) Development
Committee, Finance Minister P. Chidambaram also asked the global
community to consider immediate steps to reverse the unconscionable
increases in food prices.
These increases threaten to negate the benefits to the poor nations from
aid, trade and debt relief, he said as the two day IMF-Bank Spring
Meetings came to a close.
Noting that "the origin of the present turmoil lay in the sub-prime
mortgage crisis in the US", Chidambaram said: "As in the case of global
warming, developing countries are threatened by a crisis, not of their
making and one for which they have not been responsible in any way.
"While the effects of the turbulence are still reverberating across the
entangled financial systems of the world, they have clearly impacted
markets in several developing countries as well."
With developing countries too showing early signs of a slowdown after
higher than expected growth rates in 2007, "we now need a thorough
review and overhaul of financial oversight and regulatory mechanisms
through the entire global system," he said.
The dramatic rise in the price of crude oil and food is adding to the
woes of the developing world, Chidambaram said asking the producer
nations to seriously contemplate the management of production and
pricing policy.
Noting that the unprecedented increase in food prices has come on the
back of high energy and fertilizer prices and an increased use of food
crops for bio-fuels, he asked the developed countries to cut off
subsidies on food crops for bio-fuel production.
"In a world where there is hunger and poverty, there is no policy
justification for diverting food crops towards bio-fuels," he said.
"Converting food into fuel is neither good policy for the poor nor for
the environment."
Chidambaram welcomed the shift in focus in the proposed "New Deal for
Global Food Policy" from traditional food aid to a broader concept of
food and nutritional assistance and on medium- to long-term efforts to
boost agricultural productivity in developing countries.
Donor countries must also increase funding to the World Food Programme (WFP)
and the United Nations' Central Emergency Relief Fund (CERF), he said
asking for immediate support to poor countries in their efforts to
alleviate hunger.
"It is becoming starker by the day that unless we act fast for a global
consensus on the price spiral, the social unrest induced by food prices
in several countries will conflagrate into a global contagion leaving no
country - developed or otherwise - unscathed," Chidambaram said.
On the Doha Round of world trade talks, he said the sensibilities of the
developing countries should be key in the run-up to its conclusion.
Agriculture must continue to remain the focal point of the negotiations
since the livelihood concerns of more than a billion resource-poor
farmers depend on it. But the fact that the manufacturing and service
sectors would contribute to the bulk of the GDP growth in the
post-liberalised economic order pointed to the need for a balanced final
Doha outcome, he said.
On voice and representation in the global financial institutions,
Chidambaram said it needs to be addressed in terms of three principles
of enhancing mutual accountability, enhancing Bank legitimacy and
credibility and enhancing Bank competitiveness.
Seeking a review of the fundamental formula for International Bank for
Reconstruction and Development (IBRD) shares, he hoped that by the
Annual Meetings in 2008, the Bank will come up with a firm, concrete and
credible proposal.
Turning to issues of climate change, Chidambaram said, while it's an
over-arching global phenomenon, which impacts every one, it does not
change the primary developmental objective of the Bank - 'A World Free
of Poverty'.
"No model for addressing climate change would be acceptable, in which
some countries continue to maintain high carbon emissions while the
development options available for other countries get constrained," he
said.
The global compact for addressing climate change has to be based on the
well- established principle of common but differentiated responsibility
articulated in the UN Framework Convention on Climate Change,
Chidambaram said.
Expressing concern at lack of progress on the Millennium Development
Goals (MDGs), a set of eight globally agreed goal with a target date of
2015, related to maternal and child mortality is disturbing, Chidambaram
said: "Good governance and an effective delivery mechanism could ensure
an improved performance across MDGs.".
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