WAR IN UKRAINE WILL HAVE ‘SEVERE IMPACT’ ON GLOBAL ECONOMY IMF WARNS

Sun 06 March 2022:

On Saturday, the International Monetary Fund said it planned to forward Ukraine’s request for $1.4 billion in emergency finance to its board for approval as soon as next week, and that it was in negotiations with officials in neighboring Moldova about funding options.

The global lender said in a statement that the war in Ukraine was already driving up energy and grain costs, had displaced over 1 million people to neighboring countries, and had triggered unprecedented sanctions against Russia.

“While the situation remains highly fluid and the outlook is subject to extraordinary uncertainty, the economic consequences are already very serious,” the IMF said in a statement after a board meeting chaired by Managing Director Kristalina Georgieva.

“The ongoing war and associated sanctions will also have a severe impact on the global economy,” it warned, noting that the crisis was creating an adverse shock to inflation and economic activity at a time when price pressures were already high.

It said price shocks would be felt worldwide, and authorities should provide fiscal support for poor households for whom food and fuel made up a higher proportion of expenses, adding that the economic damage would increase if the war escalated.

Sweeping sanctions imposed on Russia by the United States, European countries and others would also have “a substantial impact on the global economy and financial markets, with significant spillovers to other countries.”

Impact on Ukraine, Moldova

In addition to the human toll, Ukraine was experiencing substantial economic damage, with sea ports and airports closed and damaged, and many roads and bridges damaged or destroyed.

“While it is very difficult to assess financing needs precisely at this stage, it is already clear that Ukraine will face significant recovery and reconstruction costs,” it said.

Ukraine’s request for $1.4 billion in emergency funding was anticipated to be considered by the board as early as next week. According to the IMF, Ukraine has $2.2 billion available under an existing stand-by arrangement until June.

According to the IMF, Moldova and other countries with significant economic ties to Ukraine and Russia are “particularly vulnerable” to scarcity and supply interruptions.

Moldova has requested an augmentation and rephasing of its existing $558 million IMF loan program to help address the costs of the present crisis, according to the IMF.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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