ADB: Asia Needs Fiscal Steps, Not Food Export Bans

Asian governments should avoid export bans to address the rising price of food and instead help the poor with fiscal measures to alleviate the impact, the Asian Development Bank (ADB) said on Tuesday.

A surge in the price of rice, a staple in many Asian countries, has made governments worried about the prospect of hoarding and social unrest, and big exporting countries have started to cut back on sales to ring-fence supplies.

"Banning of exports is no different from hoarding at a national level," ADB Managing Director General Rajat Nag told reporters at Singapore's Foreign Correspondents Association.

"The era of cheap food is over."

Nag said rice stocks in Asia had hit their lowest level in decades but were still high enough to meet demand. "We believe the situation in Asia is one marked by very high food prices and not supply shortages."

He also said that direct help to the poor was preferable to raising interest rates to tackle the problem of rising prices.

"It is an entitlement issue, the ability to buy," he said. "You have got to get support to the poor immediately. We'd rather that be done through direct fiscal stimulus than monetary policy."