Kristalina Georgieva, Managing Director of the IMF, emphasized on Wednesday during a press conference that countries must “prepare for difficult times” if oil prices remain high due to the war in the Middle East.
“We must prepare for difficult times” if the conflict continues and oil prices remain high, assured the head of the International Monetary Fund (IMF), adding that “all countries are affected, even if the shock may be asymmetric.”
Delegations from most countries around the world have been present in Washington since Monday to participate in the annual meetings of the IMF and World Bank, which extend until the end of the week.
“Countries must take the necessary measures to reduce energy-intensive activities. It must be done now, not wait for weeks,” emphasized Ms. Georgieva.
The IMF’s Managing Director urged countries not to engage in significant spending “while global debt levels are at their highest since World War II.”
According to the Fiscal Monitor report on fiscal policies, published by the IMF earlier in the day, global debt reached the equivalent of 94% of global GDP last year and could reach 100% by 2029 if no actions are taken.
“Some countries are implementing non-targeted measures, export controls, or poorly targeted tax cuts. The intentions are good, but protecting their citizens through such measures will only prolong the difficulties related to high prices,” warned Ms. Georgieva.
At the same time, central banks must be cautious “and see how things evolve” before making any decisions regarding their policy rates, especially if inflation expectations remain anchored.
However, the immediate priority remains the financial situation of countries, as the IMF already had close to forty active programs before the outbreak of the war.
So far, the Fund has received “a dozen requests” for new aid programs, “some of them from sub-Saharan Africa,” said Kristalina Georgieva.
These countries “require our attention and are an important focus of our discussions this week on how we can best help them cope with frequent shocks and uncertainties in the world,” she added.
