ADB to provide loans for food subsidy
The Asian Development Bank will provide a "sizeable" amount in budgetary support to nations affected by the spike in food prices that is affecting one billion people in the region, its president said here Saturday.
The loans will help them subsidise the price of food staples for the poor, ADB president Haruhiko Kuroda said on the first day of the body's four-day annual general meeting in the Spanish capital Madrid.
"The amount depends on the requests from the affected countries," he told a news conference. "Possible total lending could be sizeable but not enormous."
The Manila-based multinational lender will also provide two billion dollars in loans in 2008 and 2009 to finance agriculture infrastructure projects such as rural roads and irrigation systems aimed at boosting farm output in the longer term.
"Asia has a huge population with limited land for farming and a limited water supply so agriculture yields must be increased over time," Kuroda said.
Prices for the benchmark Thai variety of rice, a food stable across much of Asia, are at about 1,000 dollars a tonne, up threefold from the last ADB annual meeting in Japan one year ago.
The jump in food prices is fuelling inflation globally and the ADB predicted it would hit 5.1 percent across Asia this year, its highest level since the Asian financial crisis a decade ago and is raising concerns of popular unrest.
The food crisis has been blamed on poor harvests caused by drought, growing crops for biofuels instead of food, and surging demand, especially from China and India, for meat and dairy products as living standards rise.
Karuda said the sharp rise in prices for staples like rice was leading people to hoard food items, causing a vicious circle that leads to higher prices. "There is a kind of panic buying," he said.
On the eve of the meeting, donors pledged 11.3 billion dollars to the bank's Asian Development Fund, its key poverty alleviation mechanism, for the 2009-2012, a 60 percent increase over the last four-year period.
The fund provides grants and low interest loans to Asia's poorest countries to help them build roads, provide clean water and electricity and agriculture infrastructure.
Last year entire ADB approved 10.1 billion dollars in loans, 673 million dollars in grant projects and technical assistance amounting to 243 million dollars last year.
Pakistan was the largest recipient of ADB aid last year followed by Vietnam, India, China and Indonesia.
Established in 1966, the ADB is owned by its 67 member countries -- 48 from the Asia-Pacific region, and 19 from elsewhere around the world, including Spain.
The lender has grown from helping Asian governments develop infrastructure projects to promoting the role of the private sector in development.
Some 3,000 people -- business and government leaders, academics and representatives of non-governmental organisations -- are taking part in the ADB's annual meeting, which is being held in Spain for the first time.
It holds the annual meeting outside of Asia every two years.
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