Monday, December 20, 2004

One of the biggest surprises in the 2004:III current account data released last week was a major jump in US unilateral current transfers. After moving in a -$16-20bn band for the previous six quarters, the figure suddenly rose to just -$14.6bn. Private remittances and "other transfers" increased precipitously, from an average of -$11.6bn over the previous three quarters to just -$8.3bn in 2004:III.

While one would expect remittance transfers to increase again in the future, US government grants -- which so far in 2004 totaled $17.4bn -- may be set to wither.
The U.S. Agency for International Development, which oversees the distribution of most American food aid through its Food for Peace program, is wrestling with an estimated $650 million shortfall. To make up for the gap in funds, AID is diverting resources from long-term development food assistance programs, which address the health and food needs of millions of people suffering from chronic hunger.

Since last month, AID has canceled or delayed dozens of food orders placed by humanitarian agencies to support a long list of programs. Those include the feeding of orphans and vulnerable children, nutrition for AIDS patients and health care for mothers and infants. . . .

The United Nations World Food Program, which in the past has received more than 50 percent of its funds from the United States, is now bracing for unprecedented cuts in financial support for its non-emergency operations, according to a U.S. food aid official who did not wish to be named. It now is seeking donations from China, Russia and India, the official said.

In southern Africa, the World Food Program's appeal for $171 million to feed 2.8 million people has so far generated only $11.5 million in donations. Food stockpiles will begin running out next month in Lesotho, one of the hardest-hit countries with half a million people in need of food aid. No money has yet come from the United States, WFP officials said. . . .

"The budget deficit is so high, and the administration is trying to stop all increases other than those for defense and national security," said Ellen Levinson, executive director of Coalition for Food Aid
Thanks to Elaine Supkis for the heads up.

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