Higher import costs for food, fertiliser to add $9 bn to BoP pressures

A new paper by IMF staff estimates the impact of higher import costs for food and fertilizer for those highly exposed to food insecurity will add US$ 9 billion to balance of payments pressures of crisis hit countries in 2022 and 2023. This will erode international reserves, and their ability to pay for food and fertilizer imports.

“In many places, even though food prices have eased somewhere from recent peaks, still high food—and energy—prices have fuelled a cost-of-living crisis that is likely to increase poverty and hurt growth, potentially fuelling political instability,” the IMF said in its latest blog.

As a result, policymakers in many countries have introduced fiscal measures to protect people from the current food crisis. For this year alone, The IMF estimates that highly exposed countries need as much as US $ 7 billion to help the poorest households cope.