The global food price shock is at least as bad as the devastating crisis of 2007-08 and could worsen, the International Monetary Fund said Friday, warning that 48 vulnerable countries are seeing their import bills climb by about $9 billion over this year and next.
Some $50 billion in global support is needed to eradicate food insecurity, the fund said, but even more would be needed in investments to permanently end chronic problems such as malnutrition. While Russia’s war against Ukraine is a major factor, the food pricing problem has been brewing since 2018 due to climate change, conflicts, and then the COVID-19 pandemic.
Meanwhile, the IMF board on Friday approved a new emergency financing window that enables countries to borrow funds to support balance-of-payment issues arising from the shocks, both on the import and export sides. Low-income countries can borrow through the window at concessional rates.
The Pro read:
World Bank: 'We're nowhere near out of the woods' on food price crisis
Two World Bank experts lay out the short-term invention to help the most vulnerable deal with the food price shocks, but stress climate change, supply chain concentrations, and debt need to be addressed to build resilient and sustainable food systems.
The new 12-month window will allow countries to borrow up to 50% of their IMF share quota — a measure of a country’s stake in the fund and relative economic size — to cope with higher food and fertilizer costs. This facility complements existing IMF options available to countries that function on a multiyear basis.
IMF is not mincing its words when it comes to the severity of the moment. “The world is now facing a food crisis of a proportion that is at least equal to the 2007–08 crisis that left many countries with severe undersupply of food and caused large suffering and a high number of deaths,” it wrote in a report published this week.
In a press release Friday, IMF Managing Director Kristalina Georgieva said now is a time of “need and suffering,” as she blamed Russia’s war in Ukraine for pushing prices higher this year.
Countries in the Sahel and other parts of sub-Saharan Africa make up the largest share of the 48 most vulnerable nations. Globally, 860 million people were considered malnourished in August.
Even though food prices have come down from their peaks earlier this year, IMF is not sanguine. “High prices for fertilizers and energy as well as substantial downside risks weigh on the outlook,” the report said.
The report notes that high food insecurity has historically been associated with “social unrest, conflict, and large-scale migration.”
About the author
Shabtai Gold
Shabtai Gold is a Senior Reporter based in Washington. He covers multilateral development banks, with a focus on the World Bank, along with trends in development finance. Prior to Devex, he worked for the German Press Agency, dpa, for more than a decade, with stints in Africa, Europe, and the Middle East, before relocating to Washington to cover politics and business.