IMF looks at ways to help countries affected by global food shock

The International Monetary Fund is looking at ways to help countries affected by the global food shock caused by Russia’s invasion of Ukraine, as part of a larger rethink of how the lender of last resort can best help its member nations. 

The IMF has proposed to its board that the institution increase access to emergency financing for a year to low-income countries that are most vulnerable to the changes in the cost of food, which “has skyrocketed,” Managing Director Kristalina Georgieva said in a virtual interview with Center for Global Development President Masood Ahmed on Tuesday.

About 50 nations meet the criteria, with 20 to 30 being in need “immediately,” Georgieva said.

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Consumers globally are grappling with a deepening cost-of-living crisis spurred by food and fuel inflation that, in many locations, shows few signs of easing. High prices have triggered a wave of interest rates increases that has made debt repayments more expensive and raised worries about a funding crisis in low-income and emerging-market nations. 

The fund is undertaking “very significant thinking” on how it can change to best serve “innocent bystanders” who get hit from global shocks, Georgieva said.

“We are going to go to our board with a menu of options on how we can build the fund for today, and especially for tomorrow,” she said. “The main focus of this discussion is to recognize that the world has changed. And of course we have to change with it and preferably ahead of it.” 

Earlier this year, Treasury Secretary Janet Yellen recommended modernizing the IMF and World Bank so they are “fit for the 21st century.”

In the interview that lasted about 45 minutes, Georgieva spoke about Ukraine, saying the country could be one of those to benefit from the proposed “food shock window.” Georgieva, who spoke with President Volodymyr Zelensky earlier Tuesday, said the funding that Ukraine could get would be “in the ballpark” of matching the $1.4 billion emergency loan that it received in March.

The IMF is also working with Ukraine on a deeper, longer-term program, including an IMF mission in the coming weeks, Georgieva said.

The fund chief also discussed Argentina, the IMF’s biggest borrower, after meeting with the nation’s new Economy Minister Sergio Massa on Monday for the first time since he took office last month. Georgieva said she was impressed with the composition of the team that came to Washington, including the nation’s central bank governor and other top aides.

“That is a good signal that we have a whole of government approach to implementing the program,” Georgieva said. She came away from the meeting with Massa “with the sense that we have a partner with whom we can work well,” Georgieva said.