The countries should «to prepare for difficult times» if oil price remains high due to the Middle East war, said the Director General of the International Monetary Fund (IMF) Kristalina Georgieva at a press conference she granted.
War has accelerated price increases
«We must prepare for difficult times» if the conflict continues and the price of oil remains high, he stressed, adding: «This concerns all countries, although shock can be asymmetric».
At the heart of the discussions the war in Iran
Delegations from most countries in the world have been in Washington since Monday for the annual spring sessions of the World Bank and the IMF completed at the end of the week.
It is no surprise that the consequences of the war in Iran, the destruction of infrastructure in the wider region and the closure of the Straits of Hormuz which ejected the price of oil are at the heart of the discussions.
«We speak with all countries»Christian Mumsen, director of the IMF Strategy Department, assured. «This will enable us to better understand how they are affected, which political options have already been implemented and if they expect additional assistance from the IMF, which we should, of course, provide through our well-known instruments», add.
«Reduce the most energetic activities»
Georgieva, for her part, invited the countries to take the necessary measures to reduce their most energetic activities. «They have to do it now, not wait many weeks.»He insisted.
At the same time, the effects on the fertiliser sector, part of which, as well as certain raw materials for their manufacture, come from the same region, will increase difficulties, increasing the risk of food insecurity.
«We are concerned about inflationary risks, especially as regards the price of foodstuffs, if the price of fertilisers does not return to a reasonable level soon.», admitted by the Director General of the IMF.
Mumsen noted that «She's very concerned.» for low-income countries. In these countries households spend an average of 36% of their income to feed – in emerging markets the rate is 20% and in developed below 9%.
«No major expenditure»
Georgyeva asked countries not to go into large spending, while the level of global debt is at its highest point since World War II. According to the Fiscal Monitor report released earlier by the IMF, global debt amounted to 94% of world GDP last year and could reach 100% by 2029, if nothing is done to hold it back.
«Some countries apply non-target measures, export controls or incorrect tax reliefs. The intentions are good, but protecting their citizens by such measures will only prolong the difficulties associated with high prices.», Georgyeva warned.
At the same time, central banks should be prudent and «to see how this develops» before making decisions about their basic interest rates. «If the conflict ends soon, they won't have to take action.», add.
