TANZANIA – Russia’s war in Ukraine threatens to devastate the economies of many developing countries, which now face even higher food and energy costs and increasingly difficult financial conditions, a UN task force warned on Wednesday.
UN Secretary-General Antonio Guterres released the report, saying the war is “enhancing” a food, energy and financial crisis in poorer countries already grappling with the COVID-19 pandemic, climate change and lack of access struggling to get adequate food funding for economic recovery.
“We are now facing a perfect storm that threatens to devastate the economies of many developing countries,” Guterres said at a news conference. “Up to 1.7 billion people – a third of whom already live in poverty – are now highly vulnerable to disruptions in the food, energy and financial systems that are leading to increased poverty and hunger.”
Rebeca Grynspan, secretary-general of the UN Agency for Trade and Development, which coordinated the task force, said these people live in 107 countries that are “highly exposed” to at least one dimension of the crisis – rising food prices, rising energy prices and tightening the financial conditions.
In these countries, the report says, people are struggling to afford healthy diets, imports are essential to meet food and energy needs, and “debt burdens and dwindling resources limit governments’ ability to cope with the uncertainties.” of global financial conditions”.
According to the report, 69 of the countries with a population of 1.2 billion people are facing a “perfect storm” and are severely or significantly exposed to all three crises. These include 25 countries in Africa, 25 in Asia and the Pacific, and 19 in Latin America and the Caribbean.
Prices were already rising ahead of Russia’s February 24 invasion of Ukraine, “but the war has exacerbated a dire situation,” Guterres said.
36 countries depend on Russia and Ukraine for more than half of their wheat imports, including some of the world’s poorest countries, he said, and prices for wheat and corn alone have risen 30% year-to-date.
Russia is also the world’s top natural gas exporter and second-biggest oil exporter, and Russia and neighboring Belarus export about 20% of the world’s fertilizers. Guterres said oil prices have risen more than 60% over the past year, natural gas prices have risen 50% in recent months and fertilizer prices have doubled.
The task force said the world was “on the brink of a global debt crisis”. Grynspan, who chairs the UN Conference on Trade and Development, pointed to Sri Lanka’s default on Tuesday and said other countries are asking for help.
Guterres said the world could act to deal with the “three-dimensional crisis” and “soften the blow.”
The task force calls on countries to ensure a steady flow of food and fertilizers through open markets, lift export restrictions, and direct surpluses and reserves to those in need. Guterres said this would help keep food prices under control and calm volatility in food markets.
On energy, the task force urges governments to stop hoarding, release strategic oil stocks and additional reserves immediately, and reduce the use of wheat for biofuels. Guterres urged countries to use the crisis as an opportunity to accelerate the transition to renewable energy.
On finances, the task force “urged the international community to act urgently and swiftly” to help developing countries avoid another decade of lost economic development, “a general debt crisis and social and political instability.”
The task force says international financial institutions should offer emergency financing on concessional terms to countries suffering social and economic hardship.
She is calling on the International Monetary Fund to increase quick-financing limits, suspend interest rate premiums for two years and explore the possibility of providing more liquidity “through special drawing rights or special measures for vulnerable and hardest-hit countries”.
Guterres said the upcoming April 18-24 spring meetings of the IMF and World Bank are “a pivotal moment” for decisions on many of these issues. He said it is crucial that its members understand the need to use available money to alleviate the suffering of people around the world.
The UN chief said political will is key and announced he had asked six leaders – the presidents of Senegal and Indonesia, and the prime ministers of Germany, Barbados, Denmark and Bangladesh – to mobilize political leaders to ensure developing countries in crisis are getting the help they need.
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