IMF eyes expanded access to emergency aid for food shocks

LONDON/WASHINGTON: The International Monetary Fund’s executive board, under pressure to provide emergency funding to countries facing war-induced food price shocks, reviewed a plan on Monday that would help Ukraine and other countries hit hard by Russia’s war, sources familiar with the matter told Reuters.

Board members engaged with the plan, first reported by Reuters, at an informal board session.

Developed by IMF staff in recent months, it would allow the IMF to support countries struggling with budget problems because of the war, without imposing conditions required in a regular fund program, said the sources, who asked not to be named since the plan has not been formally approved.

Board members were generally supportive heading into the meeting, and a formal vote backing the measure is likely before the Fund’s annual meetings in October, two of the sources said.

If approved, it would temporarily increase existing access limits and allow all member countries to borrow up to an additional 50% of their IMF quota under the IMF’s Rapid Financing Instrument, while low-income countries could tap the Rapid Credit Facility, the sources said.

IMF eyes expanded access to emergency aid for food shocks

“The concept is simple, but it could help many countries,” said one of the sources. Masood Ahmed, a former IMF official who now heads the non-profit Center for Global Development think tank, welcomed the move and said the IMF existed precisely to help countries deal with the kind of balance of payments shock unleashed by the war.

“It’s good news, and I’m glad they’re doing it, but I wouldn’t stop at that,” Ahmed told Reuters.

Food prices surged worldwide after the start of the war given blocked supply routes, sanctions and other trade restrictions, although a UN-brokered deal that allowed resumed exports of grain from Ukrainian ports last month has begun to help improve trade flows and lower prices in recent weeks.

The Washington-based lender projected in July that inflation posed a “clear risk” to current and future macroeconomic stability.

Many African countries and other poor nations suffering food shortages and acute hunger have clamored for increased funds, but it was not immediately clear how many countries would seek the additional financing aid.