World leaders to take intiatives to counter food crisis

Economic leaders from the world have taken steps to alleviate the worst financial shock in decades and a food price crisis that is creating widespread unrest in developing countries. In a three day meeting that ended on Sunday, finance ministers and central bankers dealt with the credit squeeze and inflation emergencies against the backdrop of  apparent US recession and a sharply slowing US economy.

The G7 industrialized countries set the alarmed tone on the eve of the annual spring meetings of the 185 Nation, International Monetary Fund and its sister institution, the World Bank.

According to the IMF chief this was the worst financial crisis since the great depressions in the 1930s and the finance chiefs from Britain,Canada,France,Germany,Itlay,Japan, and the United States decided in favour of greater transparency in the financial system to restore normalcy to the markets.

The G7 endorsed recommendations from an international forum and set for some of them a deadline of 100 days for implementation unprecedented in its brevity. In fact some of the recommendations are policy decisions. The sudden nosedive in the global economy after several years of robust growth, even six months ago would have been unthinkable.

At the October meeting of the G7, the IMF, World Bank, the market turmoil that had erupted in August from rising defaults in the US high- risk sub prime home loan sector was largely viewed as a contained event that did not threaten the broader world economy.

With the credit squeeze still spreading, the IMF recently warned that the US economy was entering a recession and a global recession was also in view.

The IMF estimated the crisis would cost the global financial system nearly $ 1 trillion. The IMF ended up its meeting with a call for strong action and close co-operation to combat the financial crisis. Policymakers should deal with the financial crisis and supporting activity while checking and keeping the inflation under control, so as to promote global financial stability.