IMF creates instrument to help countries deal with 'food shocks'

Spread the love

IMF creates instrument to help countries deal with “food shocks”

IMF Managing Director Kristalina Georgieva welcomed the launch of the tool that will help the poorest countries on the planet (archives).

The International Monetary Fund (IMF) announced on Friday the launch of a new instrument of aid aimed at rapidly responding to the needs of States facing food insecurity.

The food shocks window, open for one year, should allow States that request it to have rapid access to emergency funding in the event of acute food insecurity, unexpected shocks in the x27;import of cereals or sudden price increases.

“I am very pleased to announce that the Executive Board of the IMF today approved the opening of a new window for financing responses to food shocks”

— Kristalina Georgieva, Managing Director of the International Monetary Fund

In concrete terms, the financing will be through the Rapid Credit Facility (RCF), which allows a loan to zero rate to low-income states facing an emergency, and through the IMF's Rapid Financing Instrument (RFI).

This new window can be used when donations and concessional funding from our partners are not sufficient or when an aid program by the Fund is not possible, detailed Ms Georgieva. in another press release.

While this financing does not provide for specific conditions or reform objectives to be achieved, it is still necessary for the requesting States to present a level of debt sustainable to benefit from it.

This new window is intended as a response to food insecurity, which has been on the rise since 2018, according to a report published Friday by the IMF, and reinforced by the pandemic and then inflationary shocks on agricultural raw materials.

The situation has further deteriorated with the war in Ukraine and its impact on the grain markets, Russia and Ukraine being two of the world's main exporters, and that of fertilizers.

Since the beginning of its invasion of Ukraine, Russia has notably targeted grain silos and prevented the export of millions tons of cereals to countries often already experiencing food insecurity.

The institution estimates that 48 countries are affected by a high level of emergency, mainly among the poorest states and dependent on Russian or Ukrainian exports.

More than 345 million people are acutely food insecure and 828 million people go to bed hungry at night , according to data from the World Food Program cited by Ms. Georgieva.

Rising food and fertilizer prices could also represent an additional cost of 9 billion dollars for the countries concerned in 2022 and 2023, which will weigh on their foreign exchange reserves, according to the IMF.

Previous Article
Next Article