The various constraints jeopardize financial sustainability by destabilizing the balance of payments.
With each new crisis that shakes the planet, the International Monetary Fund (IMF) questions its ability to act and help the most fragile countries. The question is whether its toolkit is sufficient. Food inflation, soaring energy and raw material prices and the constraints – climatic in particular – which weigh on agriculture jeopardize financial sustainability by destabilizing the balance of payments.
The Monetary Fund has two types of mechanisms. The most classic are standard loans, generally planned over three years, accompanied by a trusteeship which imposes budgetary saving measures and structural reforms. Most recently, Zambia secured $1.3 billion in support. The second mechanisms relate to emergency support – such as the“rapid financing instrument” or the “rapid credit facility» reserved for low-income countries. By definition, they respond to a temporary shock, do not impose conditionality, and their amounts are smaller. They were of course activated to cushion the Covid earthquake. The IMF has decided to relax the conditions of access by raising the ceilings (linked to the countries’ quotas in the capital of the IMF).
The problem is that today many countries exposed to this new food crisis are close to the ceilings, hence the idea, currently under discussion, of launching a new emergency aid instrument. To be eligible, a country must experience difficulties in importing or exporting food. Countries already under an IMF program would probably not benefit from this solution, which could be finalized during the Autumn Assembly, scheduled for the week of October 10 in Washington.