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The president of the International Monetary Fund (IMF) told the BBC that governments should subsidize the cost of food and electricity for the weakest sections of society.
People all throughout the world are trying to keep up with escalating living costs. Support should be offered “in a highly targeted manner, preferably by delivering subsidies directly to people,” according to Kristalina Georgieva.
Many nations are assisting, but opponents contend that it is insufficient. “There are two priorities,” Ms Georgieva said of the cost-of-living crisis. “One is the very poor people, segments of society that are now struggling with high food and energy prices.”
The second is to assist enterprises that have been “particularly harmed” by the conflict in Ukraine, she added.
The IMF’s mission is to help governments stabilize the global economy and increase prosperity.
However, this is proving difficult due to record-high food prices this year, as well as steep increases in gasoline and gas prices. This is largely due to the simultaneous shocks of the coronavirus outbreak and the conflict in Ukraine. Russia and Ukraine are important agricultural and hydrocarbon exporters.
Ms Georgieva is concerned that the protests in Sri Lanka could be duplicated in other countries if the appropriate government backing is not provided. Sri Lanka’s economic crisis, compounded by rising costs, has resulted in fatal riots, the appointment of a new prime minister, and the country’s first-ever debt default.
Similar upheaval before the epidemic, from France to Chile, was fueled by “a growing sense of unfairness” and policies made without the consent of the people, according to the IMF boss.
“If there are any lessons to be learned from 2019, it is to be much more modest about policy decisions and engage with people in different ways, because policies must be for people, not the paper we write them on,” she said.
To that goal, a coalition of international development organizations, including the IMF and the World Bank, presented a significant initiative this week to combat global food insecurity. “There’s a very real risk that skyrocketing global market prices of food and fertiliser would result in more people being hungry,” warned US Treasury Secretary Janet Yellen.
Ms Georgieva stated that while food is plentiful, it is not divided evenly. Growing more crops when possible, she noted, as well as a greater focus on agricultural output, “not only because of the war, but also because of climate change,” are the solutions.
“Trade must remain open; we should not have a situation where countries hoard more food than they require and erect all kinds of hurdles to getting it from one location to another,” she added.
Opinions expressed by California Gazette contributors are their own.