WASHINGTON: Global finance chiefs moved to aid strife-torn North Africa Thursday as the International Monetary Fund and World Bank warned of more social unrest from high food prices and joblessness.
Finance ministers of leading economies and development bank heads discussed ways to help Egypt, Tunisia and other regional economies rebuild, as the annual spring meetings of the World Bank and IMF turned their focus to social unrest amid a global economic recovers from recession.
A meeting led by US Treasury Secretary Timothy Geithner and French Finance Minister Christine Lagarde initiated a plan to coordinate aid to the region by the IMF, development banks and other groups.
"We stand ready to support these countries with responses coordinated with the international institutions, who can bring significant resources and expertise to aid the transitions," the group said in a joint statement.
"We recognize that these transitions are about expanding the freedoms and opportunities of people."
Lagarde told journalists that the European Bank for Reconstruction and Development could take a lead in the effort.
"We will doubtlessly tackle the situation of the countries of the southern Mediterranean, and in particular Egypt and Tunisia," she said.
World Bank and IMF chiefs earlier issued strong calls for advanced countries to focus on high levels of unemployment and soaring food prices, which are casting a pall over the recovery from the 2008-2009 financial crisis.
With a clock erected outside the World Bank headquarters here ticking away the rise in the number of global hungry — at a pace of more than 60 per minute headed toward one billion — bank president Robert Zoellick cited soaring food prices as "the biggest threat to the poor around the world."
"We are in a danger zone because prices have already gone up; stocks for many commodities are relatively low," he said.
Speaking separately, IMF managing director Dominique Strauss-Kahn warned of the possibility of a "lost generation" of unemployed youths if nations focus only on achieving fiscal balances without heeding social demands.
"It’s probably too much to say that it’s a jobless recovery, but it’s certainly a recovery with not enough jobs," he said.
"Especially because of youth unemployment … there is now a risk that this will be turned into a life sentence, and that there is a possibility of a lost generation."
Both leaders described the economic recovery as frustratingly incomplete, posing serious challenges for poor and wealthy countries alike, and called on the Group of 20 developed and emerging economies — many of which are facing their own fiscal crises — to focus on food and job issues.
"We may be coming out of one crisis — the financial and economic crisis — but we are facing new risks and wrenching challenges," said Zoellick.
"Food prices were not the cause of the crises in the Middle East and North Africa, but they are an aggravating factor."
He pointed to double-digit food price inflation in Egypt and Syria and data showing that commodity price spikes "particularly hurt poor countries."
Global food prices have soared 36 percent from a year ago, according to the Bank’s food price index, pushing some 44 million people below the $1.25 a day poverty line.
"One of the points that we are trying to emphasize through these meetings is the need for the G20 and for the World Bank and others to put food first," Zoellick said.
"We are in a particular moment of vulnerability in that if you have some other events, which you can never predict, we really don’t have a cushion."
Strauss-Kahn said the focus on restoring growth has sacrificed attention to important social issues.
"Common knowledge has been for a very long time that if you have growth you have jobs," he said.
But the current situation is proving that is not always correct.
"It is not the recovery we want … The question now is jobs, jobs, jobs," said Strauss-Kahn.
Young people might have expected the current malaise to be temporary, but it could turn into a much longer problem, employment-wise.
The head of the IMF noted the upheavals in Tunisia and Egypt, "where the macroeconomics are not bad but the people don’t feel any change in their situations."
Officials said they were already lining up billions of dollars to help the two countries as they move toward more democratic rule after ousting leaders who had clung to power for decades.
A senior EBRD official said they would soon move to expand their mandate to cover North Africa and maybe a broader swath of the Arab world.
"We could in a short period of time release one billion pounds ($1.6 billion) a year for Egypt, and 2.5 billion pounds for North Africa as a whole."
Meanwhile Lael Brainard, US Treasury under-secretary for international affairs, said that the World Bank, International Finance Corp and African Development Bank together could potentially muster $4 billion for Egypt and Tunisia in the next year, to help them restart their economies.
