Director of the Tax Affairs Department in the Arab Republic of Egypt International Monetary Fund (IMF)Vitor Gaspar defended on Wednesday the need to increase the international community’s support for countries with limited fiscal space, with the aim of ensuring food security in the midst of rising prices.
During a press conference, Gaspard explained that the IMF is proposing that governments prioritize “direct and targeted” transfers of resources to families. “Countries must act decisively to protect the most vulnerable,” he said, warning of the risks of social unrest due to rising food prices.
According to Gaspard, the fund estimates that inflation will rise by 5.7% this year in advanced economies and 8.7% in emerging economies. The official also commented that in most regions, the ratio between public debt and GDP will fall in 2021, but it will be higher than the level expected before the pandemic.
In response to a question about China’s fiscal outlook, Gaspar described expansionary government measures as “appropriate” to mitigate the effects of the economic slowdown, but suggested that the authorities move from traditional support for the infrastructure sector to a policy of direct support to households. .
Vitor Gaspar also drew attention to the rising risk of sovereign debt in the world, amid the effects of the pandemic and Russia’s invasion of Ukraine. Gaspard commented that international bond markets operate in an orderly fashion. However, it has been estimated that 60% of developing countries are experiencing “debt stress” or are at high risk of falling into such a scenario.
“This is an outstanding risk in the world,” he said. According to Gaspar, in advanced economies, the main risk is associated with inflation. “It is important that central banks act decisively to ensure price stability in the medium term,” he recommended.
The IMF official also said that the current macroeconomic scenario in the eurozone does not justify the implementation of additional fiscal support measures. “But fiscal policy has a role to play in the allocation and distribution of resources,” he explained.
A senior IMF official said on Wednesday that the IMF is open to providing emergency financing to help vulnerable countries with food security issues, or additional financing under existing lending programmes.
Food security is a critical issue at this week’s meetings of IMF and World Bank members, as some countries need additional financing, especially those already facing debt problems, Vitor Gaspar, director of the IMF’s Fiscal Affairs Department, told a press conference. .
“If a country already has a program with the Fund, additional financing associated with food security priorities can be considered. In the absence of such a program, or for some reason the country does not want to use this channel, the possibility of emergency financing is also open to this type of the situation “.