Tipping Points - IMF makes policy adjustments due to rising food and energy costs worldwide as poor countries pay dearly
According to the International Monetary Fund (IMF) in July, the impact of surging food and fuel prices is being felt globally but is most acute for import-dependent poor and middle-income countries confronted by balance of payments problems, higher inflation, and worsening poverty. A new IMF study analyzes the macroeconomic policy challenges arising from the price surges, and argues that many governments will have to adjust policies in response to the price shocks. In addition, the international community will need to do its share to address this global problem.
"Some countries are at a tipping point," said IMF Managing Director Dominique Strauss-Kahn (pictured) at the release of the study. "If food prices rise further and oil prices stay the same, some governments will no longer be able to feed their people and at the same time maintain stability in their economies. They need good policy options and they need help from the international community. Their challenge is ours. It is to ensure adequate food supplies while preserving the poverty-reducing benefits derived in recent years from faster growth, low inflation, and better budget and balance of payments positions."
Mr. Strauss-Kahn said the findings of the study underscored the need for a broad cooperative approach involving the countries affected, donors, and international organizations to cope with the effects of high prices.
"Working closely with our member countries, the Fund has been actively involved in providing advice and financial support to address their urgent concerns and help mitigate the impact of this crisis," he said. "Every country is different and exact policy prescriptions will vary considerably. But the universal challenge for all poor and middle-income countries is to find ways to feed the hungry while maintaining hard-won macroeconomic stability."
Key findings of the multi-country survey—the first broad assessment of the impact of the price rises, include:
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Higher food prices have cost a group of 33 poor net food importers US$2.3 billion, or 0.5 percent of 2007 annual GDP, since January 2007. In the same period, the effect of rising oil prices on 59 low-income net oil importers was US$35.8 billion, or 2.2 percent of their GDP.
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Annual food price inflation for 120 low-income and emerging market countries rose to 12 percent at the end of March 2008 from 10 percent three months earlier, while fuel prices accelerated to 9 percent from 6.7 percent in the same period. Preliminary data indicate the problem is worsening.
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Poor countries that are highly dependent on food imports are particularly vulnerable to rising food prices. The share of household spending on food in emerging and developing economies typically exceeds 50 percent. The study found that low-income households are the most affected by food price inflation and warned that the share of undernourished in developing countries could rise rapidly above the current 40 percent of total population.
Oil and food prices are expected to stay at high levels. Supply has been slow to respond to rising demand for commodities, which was largely the result of rapid economic growth in emerging and developing economies.
The IMF has apparently been working closely with its member countries on fiscal, monetary and exchange rates, trade and other policy measures to alleviate the effects of higher prices. Taking into account country-specific conditions and priorities, the Fund announced the following policy actions and concerns:
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Fiscal policy. Policy measures need to reflect each county's economic situation and capacity to create fiscal space to combat the impact of higher costs. Some countries have the scope to loosen their fiscal positions while others may need to create fiscal space through raising revenues or cutting other expenditures, or securing external grants and concessional loans. The need for support from the international community is most pressing in countries that find it difficult to accommodate higher spending.
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Monetary and exchange rate policies. While the first-round effects of higher food and fuels prices on inflation should generally be accommodated, monetary policy should seek to avoid spillover to more generalized inflation. Food and fuels prices remaining at high levels will likely call for a real exchange rate depreciation for net food and fuels importers.
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Trade polices. Global food markets need to be kept open, with restrictive policies, such as export taxes and bans, removed to maintain appropriate incentives for producers and consumers. Tariff reductions can help to reduce trade distortions and mitigate price increases.
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Fund financing. The Fund has already provided additional financial assistance to seven low-income countries through the concessional Poverty Reduction and Growth Facility and is ready to support others as needed. It is also streamlining the Exogenous Shocks Facility to make it more useful to IMF members, and stands ready to provide support for middle-income countries through Stand-By Arrangements.
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UN Gives $30 Million for Emergency Response Projects
in Seven Countries
The United Nations has announced that the world body's Central Emergency Response Fund (CERF) has allocated $30 million to support UN agencies conducting vital aid work in seven countries. Projects in Afghanistan, Burundi, Chad, the Democratic People's Republic of Korea (DPRK),Iraq, Sri Lanka and Syria will all receive funding as a result of today's announcement, which marks the second round of allocations this year from CERF for under-funded emergencies.
Under-Secretary-General for Humanitarian Affairs John Holmes (pictured right) said funds given by CERF "are often the last source of hope" for people facing crises. "Millions of people affected by some of the less visible crises around the world often have to endure great deprivation," said Mr. Holmes, who is also the Organization's Emergency Relief Coordinator.
The largest funding recipient will be UN agencies in Chad, where $6.8 million has been granted to help respond to the deteriorating humanitarian situation that has resulted from the worsening insecurity and an influx of fresh refugees from the neighbouring Darfur region of Sudan and the Central African Republic (CAR). As many as 500,000 people, mostly in eastern Chad, depend heavily on outside aid.
UN agencies operating in Iraq will receive $5 million, while those working in Syria - which is now home to about 1.5 million increasingly impoverished Iraqi refugees - will be given $4 million from CERF to assist with food, health and other relief programmes.
UN-backed programmes and projects in Afghanistan are slated to receive $4.6 million, while $4 million has been set aside for Sri Lanka, $3.6 million for Burundi and $2 million for the DPRK. The funds go to UN aid agencies and the International Organization for Migration (IOM), and then through them to partners in the field, including non-governmental organizations (NGOs).The grants were selected according to the severity of needs, the availability of funding around the world and security constraints on aid delivery.
CERF was set up by the UN at the end of 2005 to provide a standby pool of funds so that more timely humanitarian assistance can be given when natural disasters, armed conflicts and other crises occur. One-third of funds generated - from Member States, NGOs, local governments, the private sector and individual donors - are awarded to so-called "neglected crises."
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World Bank Commits to Afghanistan Development Projects
The World Bank has committed to supporting Afghanistan's efforts to overcome poverty, promote economic and social development, and strengthen governance and anti-corruption measures amid a challenging security situation. Concluding a three-day visit to Afghanistan on 24 July, World Bank Group President Robert B. Zoellick met with the country’s leadership and village leaders whose development efforts in the poorest rural areas are demonstrating the power of local governance and community entrepreneurship.
"Creating a better tomorrow for the Afghan people will take a real coming together to address the challenges of building institutions, fighting corruption and improving service delivery to citizens," said Mr. Zoellick (pictured). "We in the international community can help, but Afghan leadership is critical to getting ahead of these fundamental issues holding development back."
Mr. Zoellick noted that much had been achieved in Afghanistan in a relatively short time and there was much to be learned from these successes. During his time in the country, he visited rural projects in Bamiyan, one of the poorest provinces in the country. He met villagers who had used their funds for a micro-hydro project to generate electricity, others who decided to pool their funding to build a school.
Mr. Zoellick said he appreciated the government’s recent drafting of an anti-corruption law, which envisages an anti-corruption body reporting directly to the president, a special prosecutor and a special court. He said there was a "strong need for concrete action against corruption and for ensuring that reforms reach all areas of the public sector, otherwise government’s credibility and legitimacy might be at risk." Afghanistan has slipped sharply in Transparency International’s corruption index from 117 out of 159 countries surveyed in 2005, to 172 out of 180 countries in 2007.
Mr. Zoellick also announced support to Afghanistan from the Bank’s new Global Food Crisis Response Program, which will give US$8 million for the rehabilitation of around 500 small, traditional irrigation schemes critical to the recovery of the country’s agriculture.
The additional funding for community irrigation would bring to nearly 6,000 the number of small irrigation schemes supported by the Bank since 2002. In addition the Bank has also funded nearly US$100 million for the rehabilitation of medium-size irrigation systems. But Afghanistan will still need significant support in the current food crisis. Mr. Zoellick said the Bank’s support was aimed at the medium-term investments needed to increase food security over time but that the institution was working closely with Afghanistan’s other development partners and relief agencies to address immediate shortfalls.
In Kabul, Mr. Zoellick met President Hamid Karzai, cabinet ministers, representatives of the donor community and private sector. The World Bank Group president reaffirmed his institution’s long-term commitment to Afghanistan and support for its new five-year plan to reduce poverty and promote economic and social development, as discussed at the donor conference on the country’s future in Paris last month.
Since the resumption of operations in Afghanistan in April 2002, the World Bank Group has financed 41 projects, committing around US$1.69 billion of which US$1.25 billion is grant and US$436.4 credit (interest-free loan). The World Bank funded projects mostly support rural livelihoods, rebuilding infrastructure, education and basic health services. The World Bank also manages the US$2.5 billion Afghanistan Reconstruction Trust Fund. Since 2002, the IFC, the World Bank Group’s private sector arm, has provided US$50 million of equity financing while its Multilateral Investment Guarantee Agency has guaranteed US$80 million of investment. For more information on the Bank’s work in Afghanistan, please visit http://www.worldbank.org.af/
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NOAA Predicts Above-Normal Atlantic Hurricane Season
According to a news release on 7 August by the National Oceanic and Atmospheric Administration (NOAA) in the United States, NOAA's Climate Prediction Center has increased the likelihood of an above-normal hurricane season and has raised the total number of named storms and hurricanes that may form.Forecasters attribute this adjustment to atmospheric and oceanic conditions across the Atlantic Basin that favor storm development - combined with the strong early season activity.
NOAA now projects an 85 percent probability of an above-normal season – up from 65 percent in May. The updated outlook includes a 67 percent chance of 14 to 18 named storms, of which seven to 10 are expected to become hurricanes, including three to six major hurricanes of Category 3 strength or higher on the Saffir-Simpson Scale. These ranges encompass the entire season, which ends November 30, and include the five storms that have formed thus far.
In May, the outlook called for 12 to 16 named storms, including six to nine hurricanes and two to five major hurricanes. An average Atlantic hurricane season has 11 named storms, including six hurricanes and two major hurricanes.
"Leading indicators for an above-normal season during 2008 include the continuing multi-decadal signal – atmospheric and oceanic conditions that have spawned increased hurricane activity since 1995 – and the lingering effects of La Niña," said Gerry Bell, Ph.D. (pictured below, speaking in Washington, DC) lead seasonal hurricane forecaster at NOAA’s Climate Prediction Center. "Some of these conditions include reduced wind shear, weaker trade winds, an active West African monsoon system, the winds coming off of Africa and warmer-than-average water in the Atlantic Ocean."
Another indicator favoring an above-normal hurricane season is a very active July, the third most active since 1886. Even so, there is still a 10 percent chance of a near normal season and a five percent chance of a below normal season. NOAA’s hurricane outlook is a general guide to the expected level of hurricane activity for the entire season. NOAA does not make seasonal landfall predictions since hurricane landfalls are largely determined by the weather patterns in place as a hurricane approaches.
Five named storms have formed already this season. Tropical Storm Arthur affected the Yucatan Peninsula in late May and early June. Bertha was a major hurricane and the longest-lived July storm (July 3-20) on record. Tropical Storm Cristobal skirted the North Carolina coastline. Dolly made landfall as a Category 2 hurricane at South Padre Island, Texas on July 25. And on August 5, Tropical Storm Edouard struck the upper Texas coast.
"It is critical that everyone know the risk for your area, and have a plan to protect yourself, your family and your property, or to evacuate if requested by local emergency managers. Be prepared throughout the remainder of the hurricane season," Bell said. "Even people who live inland should be prepared for severe weather and flooding from a tropical storm or a hurricane."
The Atlantic hurricane season includes activity over the Atlantic Ocean, Caribbean Sea and Gulf of Mexico. The peak months of the season are August through October. NOAA understands and predicts changes in the Earth's environment, from the depths of the ocean to the surface of the sun, and conserves and manages our coastal and marine resources. Visit http://www.noaa.gov. NOAA’s National Weather Service:
http://www.weather.gov. NOAA’s Climate Prediction Center: http://www.cpc.ncep.noaa.gov. Updated 2008 Atlantic Hurricane Outlook: http://www.cpc.ncep.noaa.gov/products/outlooks/hurricane.
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Australia Commits $2.5 Billion to Indonesian Development
Australia will provide up to AUD 2.5 billion (21.25 trillion rupiah) over the next five years to Indonesia to tackle poverty and assist it to achieve its social and economic development priorities, the Australian embassy said on its website on Monday, 11 August 2008. According to the announcement, "Australia is committed to working in partnership with Indonesia to meet its Millennium Development Goals and create a better life for the poorest people in Indonesia."
One of the flagship projects of the partnership is the AUD 328 million (2.79 trillion rupiah) initiative to improve hundreds of kilometres of national roads and bridges in 10 provinces across eastern Indonesia. Indonesia is trying to accelerate construction of roads and ports to ease transportation of goods across the 18,000 islands that make it the world's largest archipelago. Improved roads will also help slow inflation, reduce costs for farmers and boost economic growth.
"Roads will give farmers access to markets, encouraging investment," said Australian Foreign Minister Stephen Smith (pictured), who is on a visit to Indonesia.
Smith was on the second day of a whirlwind trip to Indonesia, and was due to open a junior high school in Makassar, southern Sulawesi - the mid-point in Australia's $A335 million commitment of 2,000 new or expanded schools in poor and remote areas by the end of next year. Almost two million Indonesian teenagers aged 13 to 15 are not in school.
"The opening will mark the halfway mark of an ambitious project, under the Australia-Indonesia Partnership, to build or expand 2,000 high schools across 20 provinces by the end of 2009," Smith said in Jakarta.
Australia is funding this program to help Indonesia fulfill its vision that all young Indonesians will have nine years of basic education. The Australia-Indonesia Partnership has grown to nearly half a billion dollars this year and is Australia's largest development assistance program. For more information, visit http://www.foreignminister.gov.au/.
Source: World Bank Press Review for August 12, 2008.
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Great Project Management Films
Reported by David Shannon in London, UK
It is always a delight when a movie director seems to make a film specifically for our project management audience. I saw a classic of this minor genre last week here in London called Man on Wire, directed by James Marsh. It is officially registered in the education/general interest genre; don’t believe it, this is a PM Film.
It aims to be a reconstruction and post project examination of a high risk project interspersed with original footage from project archives. Anyone with an interest in project management will be struck by the many incidents that illuminate fundamental project management topics. Particularly memorable are illustrations of:
Photo: ©2008 Jean-Louis Blondeau / Polaris Images.
The list goes on. I challenge any of us to come away without a memorable image in their favourite (yes this is an English UK report) knowledge area.
The film may also be enjoyed just as a great story beautifully crafted and filmed.
As a bonus, it teaches again that before a dreadful death, there may have been a sublime life. It repositions and over-rights an iconic image in our minds to make our memories wiser and healthier. See it.
For information, visit http://www.manonwire.com/.
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World Bank Sanctions Korean Construction Firm for Bid Rigging on Philippines Road Project
The World Bank has announced in Manila that it has debarred the Korean firm Dongsung Construction Co. Ltd. (Dongsung) for fraudulent and corrupt practices in relation to a Bank-financed road project in the Philippines. The first phase of the project, known as NRIMPI, closed in March 2007.
Dongsung did not contest accusations brought against the firm in the Bank’s administrative sanctions proceedings. Under the terms of its debarment, Dongsung cannot be awarded a Bank-financed contract in any country during the next four years.
The debarment is a result of an investigation conducted by the World Bank’s Integrity Vice Presidency (INT), which is responsible for investigating allegations of fraud and corruption in Bank-financed projects. NRIMPI was designed to assist the Philippine government in the upgrading of the roads network and was partially financed by a $150 million loan from the World Bank. It aimed not just to build roads, but also to address weaknesses in project management, so that future roads projects would deliver more benefit at lower cost.
Through an in-depth quantitative and qualitative analysis of the procurement process that the firm participated in as well as numerous interviews, investigators uncovered evidence of Dongsung’s involvement in widespread bid-rigging.
Mr. Bert Hofman (pictured right), World Bank Country Director for Philippines, said, "Rapid action against colluding companies demonstrates that efforts to combat corruption are working and sends a strong signal across the private sector. Building more and better roads to remote areas is critical for development in the Philippines. But it is also critical to take action against corruption. NRIMP is now in its second phase and includes stringent anti-corruption mechanisms, such as the use of an independent procurement evaluator and independent oversight by civil society, in part because of what the INT investigation of NRIMPI revealed."
The World Bank revised its sanctions procedures in 2006 to allow the Bank to deal with fraud and corruption cases more efficiently. At the first tier of the two-tier sanctioning process, the Evaluation and Suspension Officer reviews the case brought by INT against a respondent. The Bank Evaluation Officer determines whether or not there is sufficient evidence to support the accusations against the respondent and recommends an appropriate sanction. Under the sanctions procedures, when a respondent like Dongsung chooses not to contest the accusations against it within 90 days, the Sanctions Board will then impose the recommended sanction.
According to Mr. Leonard McCarthy, World Bank Integrity Vice President, "Effective development requires all of us to be vigilant in detecting fraud and corruption. Those people who bring allegations to INT deserve special commendation for assisting the Bank in seriously addressing corruption. For our part, INT will continue increasing its outreach efforts so as to contribute to an environment that encourages reporting."
Since 1999, the World Bank has debarred 343 firms and individuals for their involvement in fraud and corruption in Bank-financed projects.
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Experience Italy in November! Pre & Post Congress Tours Announced for IPMA World Congress in Rome
The project management team for the 22nd IPMA World Congress on Project Management - ROMA 2008 Project Management to Run - has announced that a variety of pre and post congress tours of Italy will be available for participants. The IPMA 22nd World Congress on Project Management will be held in Rome, Italy during 9-11 November 2008.
EEM Congressi & Eventi, the Official Secretariat, will offer several tours which can be organized on demand for groups and/or individuals. The following examples have been announced by the IPMA congress team.(Prices include: transport, accommodation in double room of (***) stars superior or (****) stars hotel, professional assistant, guide and entrance fees.) Examples include the following:
Florence - 2 days/1 night - Cost 280,00 € per person. Departure: Friday, November 7 and Wednesday, November 12. Day 1: Transfer from Rome to Florence - Half day guided tour of Florence - Overnight accommodation. Day 2: Day at leisure for optional tours, self discovery, shopping - Return to Rome.
Florence & Tuscany Art Cities - 3 days / 2 nights – Cost 500,00 € per person. Departure: Thursday, November 6 and Wednesday, November 12. Day 1: Transfer from Rome to Pisa - Half day guided tour of Pisa - Overnight accommodation. Day 2: Breakfast at hotel - Transfer to Lucca and visit of the city - Transfer to Florence - Overnight accommodation. Day 3: Half day guided tour of Florence - Afternoon at leisure for optional tours, self-discovery, shopping - Return to Rome.
Venice - 3 days / 2 nights - Cost 500,00 € per person. Departure: Thursday, November 6 and Wednesday, November 12. Day 1: Transfer from Rome to Venice - Initial visit at twilight - Overnight accommodation. Day 2: Breakfast at hotel - Guided tour of Venice - Afternoon at leisure for optional tours, self discovery, shopping - Overnight accommodation. Day 3: Half day guided tour of Venice and its laguna - Return to Rome.
Amalfi Coast & Island of Capri - 4 days/3 night - Cost 570,00 € per person. Departure: Wednesday, November 5 and Wednesday, November 12. Day 1: Transfer from Rome to Sorrento -- Visit of the town - Overnight accommodation in Sorrento. Day 2: Breakfast at hotel - Half day guided tour of the Amalfi Coast - Afternoon at leisure for optional tours, self discovery, shopping - Transfer and overnight accommodation in the island of Capri. Day 3: Visit of Capri. Day 4: Return to mainland and guided visit of the remains of the Roman city of Pompei. Return to Rome.
Tours require a minimum of 15 participants. Please visit the official Congress web site at www.ipmaroma2008.it for all updated information and for reservations.
The "ROMA 2008 - Project Management to Run" world congress will include keynote speeches and 12 streams of presentations over three days, with as many as 200 presentations on important project management topics. Approximately 1,000 participants from the 45+ countries represented by IPMA membership are expected to attend, making it one of the largest project management events in the world this year. The 22nd IPMA World Congress and Exhibition will be held at the Palazzo dei Congressi near the heart of downtown Rome. For registration, schedule and other information, visit the conference website at www.ipmaroma2008.it.
The local hosts for the ROMA 2008 World Congress are the Italian Project Management Academy and the Italian National Association of Industrial Plant Engineering (ANIMP). The President of ANIMP is Fabrizio Di Amato; the President of the Italian PM Academy is Roberto Mori; the Congress Chairman is Luigi Iperti; and the Project Manager for IPMA 2008 is PierMarco Romagnoli.
Founded in 1967 and registered in Switzerland, the International Project Management Association (IPMA) is an international federation of more than 45 national PM societies in Africa, Asia, Europe and the Americas. Local societies serve each country in its national language. IPMA provides an umbrella organization at the international level. Additional information is available at www.ipma.ch.
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