IMF May Have To Deploy An Emergency Food Help

According to sources familiar with the situation, the International Monetary Fund is exploring methods to offer emergency money to nations experiencing war-related food price shocks. It will debate potential solutions on Monday at a meeting.

The initiative, which hasn’t been announced before, will be discussed during a non-public board meeting. It would enable the IMF to assist Ukraine and other nations impacted by Russia’s conflict in Ukraine without imposing the criteria necessary in a regular fund program. Before the Fund’s annual meetings in October, a formal vote is anticipated.

IMF To the Rescue

According to the sources, if adopted, it would momentarily raise the access thresholds now in place. Moreover, it would let all member nations borrow up to an extra 50% of their IMF quota under the IMF’s Rapid Financing Instrument and the Rapid Credit Instrument for low-income countries. One insider added that the idea is straightforward but might benefit many countries. Due to sanctions, obstructed supply routes, and other trade restrictions, food prices skyrocketed after the war. However, an UN-brokered agreement that allowed grain exports from Ukrainian ports to resume last month has started to help improve trade flows and lower prices in recent weeks.

According to a July forecast by the Washington-based lender, inflation will hit 6.6% in advanced nations this year. Moreover, it forecasts 9.5% in emerging markets and developing economies. According to them, this will create a “clear danger” to the stability of the macroeconomy now and in the future.

Many African countries and other impoverished countries have cried out for more money. It was unclear how many countries would do so. Ukrainian leaders claim they need a “full-fledged” financial package. The IMF plan would provide limited assistance to Ukraine.