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Rising food prices could have terrible consequences for the world, including the risk of war, the IMF said Saturday, calling for action to keep inflation in check. "Food prices, if they go on like they are doing today ... the consequences will be terrible," International Monetary Fund managing director Dominque Strauss-Kahn said. "Hundreds of thousands of people will be starving ... (leading) to disruption of the economic environment," Strauss-Kahn told a news conference at the close of the IMF spring meeting here. Development gains made in the past five or 10 years could be "totally destroyed," he said, warning that social unrest could even lead to war. "As we know, learning from the past, those kind of questions sometimes end in war," he said. If the world wanted to avoid "these terrible consequences," then rising prices had to be tackled. Skyrocketing prices on rice, wheat, corn and other staple foods like milk particularly hurt developing nations, where the bulk of income is spent on the bare necessities for survival. Higher energy prices, too, are driving up the cost of food, as well as stoking broader inflation. In recent months, rising food costs have lead to social unrest in several countries such as Haiti and Egypt. Thirty-seven countries currently face food crises, according to the Food and Agriculture Organization. Escalating inflation is complicating the already complex challenges of a global financial crisis battering the world economy, Strauss-Kahn said. The 185-nation IMF called for a strong front to put the reeling world economy back on track. "The global crisis has to be addressed with a global view and by strengthening the role of multilateral institutions," Tommaso Padoa-Schioppa, chair of the the International Monetary and Financial Committee (IMFC), the IMF's top policy-making body, told reporters in a briefing. In a statement, the IMF said that "policymakers should continue to respond to the challenge of dealing with the financial crisis and supporting activity, while making sure that inflation is kept under control." The IMF stressed that "the challenges facing the world economy are of a global nature, requiring strong action and close cooperation among the membership." Unlike the last IMF meeting in October, where internal reforms were high on the agenda, this time the multilateral institution faces a full-blown, and still unfolding, financial shock that began in August amid rising defaults on US high-risk subprime home loans. Tasked with maintaining global financial stability, the IMF, whose own finances are strained, insists its expertise and global range make it a key player in resolving what Strauss-Kahn earlier called the worst financial crisis since the Great Depression of the 1930s. The IMF last week warned the global economy is slowing so rapidly it could slide effectively into recession this year and next. IMF policymakers also welcomed moves by central banks to provide liquidity support to ease strains in the credit markets. The US Federal Reserve, the European Central Bank and others have pumped hundreds of billions of dollars into the money markets that seized up in the spreading subprime contagion. The IMF also applauded Financial Stability Forum policy recommendations adopted Friday by the Group of Seven industrialised countries in the hope of improving transparency and resiliency in the financial markets within 100 days. Regarding internal reforms, the IMF said it hoped governors would soon approve key voting and financial measures approved by the executive board. It said it looked forward to approval of a reform of voting rights, long demanded by developing countries, by April 28, and a new income model that includes the sale of 403 tonnes of gold to raise cash, by May 5. (AFP) In Depth
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