Editorial: IMF Gives Us Some Insights On The Lesson Of Today’s Double Crisis

The repercussions of the Russian-Ukraine conflict is already evident in Fiji.

Because we’re classified a small and emerging economy, the far-reaching effects of the conflict on us is inevitable.

Sanctions imposed on Russian by Global North regions, the EU, US and UK are mounting, including the most essential, banning imports of Russia’s oil and gas to their nations.

This ban has and is continuing to impact world market prices on oil and gas.

This one sanction is just one example of how critical these nations are to the rest of the world.

Already, rising inflation felt since 2019, the COVID-19 pandemic and then this conflict had already painted a clear picture that global growth would unlikely improve.

And if that was not enough, the climate change reality to add the challenges.

In fact, the International Monetary Fund (IMF) in its April 2022 World Economic Outlook (WEO) told us this.

Last week, in the WEO titled War Sets Back the Global Recovery, the report projected global growth to slow from an estimated 6.1% in 2021 to 3.6% in 2022 and 2023.

This is 0.8% and 0.2% points lower for 2022 and 2023 than projected in January.

In its WEO in January, it projected global growth to moderate from 5.9% in 2021 to 4.4% in 2022.

Projections for Fiji’s growth in WEO in April are 6.8% this year and 7.7% next year.

But IMF Managing Director, Kristalina Georgieva outlined some relief, if not all, on how the financial institution with its pool of think tanks on how the world, including Fiji can weather the storm.

“We have presented our Global Policy Agenda,” she said.

“We are analysing the repercussions of the crisis we are facing, and we also offer a way forward in terms of an immediate response and longer‑term efforts to boost resilience to shocks to still come."

“Our immediate hope must be for the war to end."

"That would have the single most positive effect on the global recovery right now."

“In the meanwhile, we must do everything we can to help Ukraine and other heavily affected countries.”

Among its other suggestions and assistance is advice on to governments and central banks in fighting inflation through monetary policy tightening.

“For low‑income countries, its burden has reached 50% of GDP, and that places 60% of countries at or near debt distress,” she said.

“To address debt, countries need domestic policies that can help bring their budgets back on track, while providing targeted assistance to the most vulnerable."

And they can do that with more equitable tax policies.

“At the same time, international support is essential, and here we have said that the G20 Common Framework for Debt Treatment must be improved with clear procedures and timelines for debtors and creditors."

"It should also be expanded to other highly indebted vulnerable countries.”

These immediate responses, she said, will lessen the impact of today’s double crisis; but to be ready for tomorrow’s challenges, we need reforms to build resilience.

“For people, by acting to remedy education losses and reskill the labour force for the digital economy, to reduce corrosive inequality.”