SGHOUSING.COM 新加坡房地产网

They may do more harm than good to long-term economic growth, he says

(WASHINGTON) United States Treasury Secretary Henry Paulson advised developing nations struggling with soaring commodity costs against using price controls because they may do more harm than good to long-term economic growth.

Governments ‘need to resist the temptation of price controls and consumption subsidies that are generally not effective and efficient methods of protecting vulnerable groups’, Mr Paulson said in the text of a speech to the World Bank’s development committee in Washington.

Record prices for commodities from crude oil to rice are causing food shortages and political unrest in poor countries and increasing concern elsewhere about inflation.

Mr Paulson said improvements in agriculture and energy conservation are better policies to pursue than government-imposed measures to contain prices, which he said may exacerbate problems.

Mr Paulson delivered his remarks at the semiannual meetings of the International Monetary Fund (IMF) and World Bank.

IMF managing director Dominique Strauss-Kahn said further gains in food prices would be ‘terrible’ for the world’s poor and throw hundreds of thousands into starvation.

Governments throughout Asia, Africa and the Middle East are seeking to combat food inflation and avoid social unrest by curbing exports or lifting import duties on basic food staples such as rice.

Global food prices surged 57 per cent last month from a year earlier, according to the United Nations, and the World Bank warns civil disturbances may be triggered in 33 countries.

Mr Paulson said price controls and subsidies ‘tend to create fiscal burdens and economic distortions while often providing aid to higher-income consumers or commercial interests other than the intended beneficiaries’.

‘Governments of countries that are experiencing severe negative shifts in the terms of trade due to higher commodity prices, including higher food prices, may need to implement better energy demand policies and targeted safety-net programmes while considering longer-term measures, such as promoting sustainable energy development and agricultural growth,’ Mr Paulson said.

The world’s economic ministers believe that shortages and skyrocketing prices for food posed a potentially greater threat to economic and political stability than the turmoil in capital markets.

The ministers, conferring in the shadow of a slumping US economy that threatens to pull down the economies of other countries, turned their attention to the food crisis and called on the wealthiest countries to fulfil pledges to help prevent starvation and disorder in Asia, Africa and Latin America.

‘Throughout the weekend we have heard again and again from ministers in developing countries and emerging economies that this is a priority issue,’ said Robert B Zoellick, president of the World Bank.

“We have to put our money where our mouth is now, so that we can put food into hungry mouths. It is as stark as that,” he added.

Mr Zoellick said that almost half of the US$500 million that the World Food Programme recently requested in additional pledges for food aid this year had been committed, but that the programme would not meet a deadline of raising the money by May 1.

The World Food Programme is seeking the aid, on top of nearly US$3 billion already committed, because of shortfalls in food distribution resulting from higher prices.
– Bloomberg, NYT

Source : Business Times - 15 Apr 2008