IMF states Middle East conflict may intensify balance of payments pressures, prepares aid for affected countries

The International Monetary Fund stated that, given the increased uncertainty caused by the Middle East conflict, the organization is ready to provide assistance to countries facing balance of payments pressures. IMF Chief Kristalina Georgieva said she expects demand for IMF programs to increase. She pointed out that currently about 50 countries rely on the IMF to meet their balance of payments needs. Georgieva stated, “Some member countries are experiencing significant balance of payments pressures and are in contact with us. We are prepared to take action.” She expressed concern about some Pacific island nations, which are most vulnerable during global oil supply disruptions. Low-income and high-debt countries may also be under pressure. According to her, a 10% increase in energy prices sustained for a year would lead to approximately 40 basis points of inflation and slow economic growth by up to 0.2 percentage points.