The world is facing a “crisis within a crisis” and needs unity in response to inflation and risks of food insecurity, IMF Managing Director Kristalina Georgieva said Wednesday (April 20) in Washington, DC.
“We are facing a crisis upon a crisis, a war on top of a pandemic, and it’s like being hit by another storm before we have recovered from the last one. What is the result? A massive setback for the global economy,” Georgieva said at her opening news conference launching the IMF and World Bank Spring Meetings.
The Fund is warning that elevated inflation may become ‘de-anchored’ from expectations the longer that prices continue to rise, especially for basic commodities like food and fuel.
“Accelerated inflation, it has become a clear and present danger for many countries. Rising food and fuel prices are training the budgets of ordinary families to a breaking point. Financial tightening because of the need to counter inflation. Hitting countries with high debt the hardest,” she explained.
Addressing the Russian invasion of Ukraine, Georgieva addressed efforts by the IMF and G20 to help fund the government in Kyiv as it suffers a humanitarian crisis.
“Our immediate hope must be for the war to end. That would have the single most positive effect on the global recovery right now. In the meanwhile, we must do everything we can to help Ukraine and other heavily affected countries,” said Georgieva, who has family in the embattled city of Kharkiv in eastern Ukraine.
The IMF sees the impact of sanctions on Russia and a drop in Ukrainian wheat exports due to the war as particularly hard hitting on Africa and the Middle East, which rely on grain imports.
“But the most troubling impact is of high food prices and food insecurity. To put it very simply, a war in Europe, in Ukraine translates into hunger in Africa. So what must be done and where we are concentrated on three avenues of faction one? Protect countries and people from the risk of food crisis, and there we know that bringing international the international community together to provide financing, also to guarantee the export of food and to build up agricultural productivity in Africa, including measures right now to get farmers to produce more. This is absolutely paramount,” said Georgieva.
She was asked what sort of aid can be made available to Ukraine, and cited the need for grants in the short term to keep the country going, before being able to assess long term reconstruction costs. The Ukrainian side has said this could be something like US $5 billion per month. Georgieva pointed out that the IMF and World Bank are looking for ways to stock a fund administered by the IMF through member donations.
“Let me stress the five billion is to keep the economy functioning. It is not to meet the reconstruction needs of Ukraine that are going to be huge. What we do is we work with our partners to ensure that we mobilize through different channels that kind of support and that we work further on detailing the exact needs and how best thess needs can be can be met. As I mentioned in the beginning, we have created a fund administered account. We already have one contribution to this account and it is open to others to contribute. “
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