- …says conflict may deepen macroeconomic strains
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Following the multiplier effects of the escalating crisis in the Middle East on some economies in Africa, the International Monetary Fund (IMF) has opened up on plans to support Nigeria and other affected countries with special funds ranging between $20 billion and $50 billion.
Disclosing this at the unveiling of the Global Policy Agenda during the ongoing IMF/World Bank Spring Meetings in Washington DC, the Managing Director of IMF, Kristalina Georgieva, said the support was necessary as the fallout from the escalating Middle East crisis threatens to deepen macroeconomic strains across energy-importing countries.
According to the IMF boss, the “Fund is preparing to scale up its crisis response, with potential financing support projected at between $20 billion and $50 billion for countries facing heightened external shocks and limited fiscal space.” “We have been closely watching the events in the Middle East.
The war has already caused immense hardship and pain for people in the region and around the world. “This is an asymmetric shock, with the biggest burden falling on countries that import energy and have limited policy space. In many cases, these are low-income or fragile economies.
These economies need attention and an important focus of our discussions this week is how we can best support them. “As our Global Policy Agenda makes clear, the IMF serves as the firefighter for our member countries, and we are committed to helping them navigate this complex landscape. “We anticipate nearterm demand for IMF financial support to range from $20-50 billion.
This represents prospective demand for new programs from at least a dozen countries, most of them in SubSaharan Africa,” she added. Speaking further, Georgieva said the plan was being coordinating closely with the IEA, World Bank, and other partners-including those at the regional level to maximize a combined response in mitigating this crisis.
She reiterated that in the short term, maintaining macroeconomic and financial stability was key and that’s while countries are naturally inclined to act boldly in response to a supply shock, she advised to look before leaping.
She said: “On monetary policy, for countries where monetary policy was well calibrated before the shock and expectations remain anchored, “wait and see” is the right approach. In other countries early policy action may be required.
