IMF pledges aid to economies ravaged by Middle East conflict
What's the story
The International Monetary Fund (IMF) has expressed its readiness to assist nations grappling with balance-of-payments issues amid escalating tensions in the Middle East. The conflict, which started with the United States and Israel strikes on Iran, has severely impacted economies over the past week. IMF Managing Director Kristalina Georgieva told Bloomberg she expects increased demand for the fund's programs as foreign aid declines.
Economic anchor
IMF chief on balance-of-payments support
Georgieva revealed that around 50 countries are already relying on the IMF for balance-of-payments support. She was quoted as saying, "We have some of the members that have significant balance of payment concerns already engaging with us." The IMF chief stressed the fund's responsibility to be an anchor of stability in these uncertain times.
Inflation risk
Georgieva warns of the impact of rising energy prices
Georgieva also warned about the potential impact of rising energy prices on global inflation and economic growth. She said a 10% rise in energy prices for a year would push up inflation by 40 basis points and slow growth by up to 0.2%. Central banks should prepare for possible oil shocks that could affect consumer prices and weaker currencies, she added.
Vulnerable economies
Pacific island countries at risk, says Georgieva
Georgieva also voiced her worries over some Pacific Island countries that are most exposed to disruptions in global oil supplies. Low-income and heavily indebted countries could also face pressure, she said. She urged these nations to build fiscal capacity, strengthen institutions, and diversify energy supplies as part of their risk mitigation strategies.
Escalating conflict
Conflict in Middle East escalates, oil prices soar
The conflict in the Middle East has intensified, with Iran launching attacks on Israel, the United Arab Emirates, and Qatar. The US and Israel's actions have killed hundreds in Iran, which retaliated with missile and drone strikes. Shipping through the Strait of Hormuz has declined, and oil prices have soared.
Retaliatory strikes
War enters 6th day, Iran launches attacks in Israel
On the sixth day of the war, Iran launched a series of attacks on Israel, the UAE, and Qatar. Iranian media reported explosions in various parts of Tehran while the Israeli military warned residents to evacuate certain areas. An air attack killed 17 people in a guest house northwest of Tehran, according to Iranian state television.