New Telegraph

…IMF may provide emergency financing for nations

The International Monetary Fund (IMF) is open to providing emergency financing to help vulnerable countries with food security issues, or additional funding under existing lending programmes, according to the Director of the Fund’s Fiscal Affairs Department, Vitor Gaspar. He told a news conference that food security was a critical issue at this week’s meetings of IMF and World Bank members, with additional financing needed by some nations, especially those already facing debt distress.

“If a country already has a program with the fund, additional financing associated with food security priorities can be considered, and in case such a program does not exist, or for whatever reason the country does not want to use that channel, the possibility of emergency financing is also open to this type of situation,” he said. Meanwhile, Reuters reported Gaspar as saying that the IMF wants governments to target fiscal support to vulnerable populations hit hardest by rising energy and food prices, and now facing growing food insecurity as a result of Russia’s war in Ukraine.

The news agency quoted him as saying that “government act- ing in its special role to protect the vulnerable when things fall apart goes a long way to keep social cohesion.” Gaspar said there was ample evidence that financial crises, pandemics, and volatile or surging prices could exacerbate divisions and strife, and fiscal policy had an important role to play in addressing such concerns. “It is an absolute imperative for public policies everywhere to provide food security for all,” he said, arguing in favor of targeted, temporary measures such as cash transfers instead of broader, generalised subsidies that could be costly.

Measures taken by many countries to limit the rise in domestic prices could also exacerbate global mismatches between supply and demand, driving prices even higher. Gaspar said poor households spent up to 60% of their budgets on food, compared to just 10% for the average household in advanced economies. However, many countries lack the spending power to fully address the latest crisis, after unprecedented outlays during the height of the COVID pandemic that drove global debt to $226 billion in 2020 – the largest one-year surge in debt since World War Two. “We believe that the global debt risks are quite significant. They affect some countries in all country groups,” Gaspar said, pointing to high yield spreads on some emerging market debt that reflected growing market perception of risk.

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