WASHINGTON (Thomson Financial) - The International Monetary Fund (IMF) today called on countries to reduce barriers to trade and increase financial aid to poor and middle-income food importing countries that are having trouble securing food supplies in the wake of rising commodity prices.

"If food prices rise further and oil prices stay the same, some governments will no longer be able to feed their people and at the same time maintain stability in their economies," IMF managing director Dominique Strauss-Kahn said today after the release of a new study on food price increases.

"They need good policy options and they need help from the international community," he said.

The study found import-dependent poor- and middle-income countries in Africa, Asia and Latin America are hurt most by rising food prices. Specifically, rising prices have cost 33 poor importing countries 2.3 bln usd since 2007, or 0.5 pct of their GDP.

It also said that in the same period of time, a group of 59 net oil importers have paid 35.8 bln usd to adjust to higher oil prices, or 2.2 pct of their GDP.

The IMF said today it is prepared to help offer policy advice to importing countries, but started by warning these countries that they should pass on high commodity prices to consumers, and then mitigate these rising prices by better targeting food aid programs and reducing tariffs.

The IMF explicitly warned against efforts to offer price subsidies and reduce consumption taxes, since these measures can "result in over consumption, and may be difficult to reverse."

"Less than full pass-through and/or other fiscal measures to mitigate the impact of higher prices typically result in fiscal costs that need to be assessed carefully," the report added.

The study also recommended that countries make adjustments to their fiscal position in order to accommodate the changes needed to help offset rising prices.

Elsewhere, the IMF stressed the importance of keeping global food trade flowing, including by eliminating export restraints on the exporter side, and reducing import tariffs on the importer side. However, this advice comes as more exporters are setting up export restrictions in order to ensure stable food supplies.

The IMF also encouraged countries to adopt monetary policies that ensure inflation does not spread beyond food and fuel. pete.kasperowicz@thomsonreuters.com pik/wash/am

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