Food crisis: IMF eyes expanded access to emergency aid

The International Monetary Fund (IMF) is considering ways to provide emergency aid to countries facing war-induced food price shocks.

Sources say the IMF will discuss measures at an executive board meeting on Monday where the plan will be presented at an informal session.

The measure would allow the IMF to help Ukraine and other countries hit hard by Russia’s war in Ukraine without imposing conditions required in a regular fund program, the sources added.

A formal vote backing the measure – which has been developed by the IMF staff in recent months – is expected before the Fund’s annual meetings in October, the sources said.

If approved, it would temporarily increase existing access limits and allow all member countries to borrow up to an additional 50% of their IMF quota under the IMF’s Rapid Financing Instrument, and the Rapid Credit Instrument that serves low-income countries.

“The concept is simple, but it could help many countries,” one of the sources said.

Food prices surged worldwide after the start of the Russia-Ukraine war with blocked supply routes, sanctions, and other trade restrictions.

Also Read: IMF extends emergency funding by 18 Months, blames COVID-19

A UN-brokered deal that allowed resumed exports of grain from Ukrainian ports last month has begun to help improve trade flows and lower prices in recent weeks.

The Washington-based lender projected in July that inflation will reach 6.6% in advanced economies this year, and 9.5% in emerging market and developing economies, posing a “clear risk” to current and future macroeconomic stability.

Many African countries and other poor nations suffering food shortages and acute hunger have clamored for increased funds, but it was not immediately clear how many countries would seek the additional financing aid.

The IMF proposal would offer some limited help to Ukraine, but its officials say they need a “full-fledged” financing package as they scramble to keep the government running while fighting the first major war in Europe since World War Two.

Russia’s war against Ukraine has altered global patterns of trade, production, and consumption of commodities in ways that will keep prices at historically high levels through the end of 2024, the World Bank reported in August.

Zainab Sa’id