AS the global food crisis escalates, the International Monetary Fund (IMF) is making emergency funds available for countries struggling to feed themselves.
On September 30, the IMF Executive Board approved a new, temporary Food Shock Window (FSW) under its emergency financing instruments (Rapid Credit Facility-RCF/Rapid Financing Instrument-RFI).
The IMF pointed out that a combination of climate shocks and the pandemic has disrupted food production and distribution, driving up the cost of feeding people and families.
Additionally, Russia's invasion of Ukraine has pushed the price of food and fertilisers even higher and exacerbated the shortages in food supplies — hurting food importers and some exporters alike.
The Food Shock Window will provide, for a period of a year, a new channel for emergency fund financing to member countries that have urgent balance of payment needs due to acute food insecurity, a sharp increase in their food import bill, or a shock to their cereal exports.
Access will be consistent with the actual balance of payments needs, and capped at 50 per cent of quota, and will be additional to the current annual access limits under the RCF/RFI.
The cumulative access limits under the RFI regular window and the RCF exogenous shock window, currently at 150 per cent of quota, will be increased to 175 per cent of quota for members that will borrow through the FSW. A review is planned by the end of June 2023.
In terms of requirements needed to access the FSW, member countries would be expected to commit to measures ensuring transparency and accountability in the spending of emergency resources, tailored to the specific circumstances of each country.
Beyond that the IMF executive directors considered that other spillovers from the war would have warranted extending the qualification criteria for the new window. To that end the directors looked forward to continued staff work to ensure that the fund's lending toolkit responds to members' needs under current challenging circumstances.
At the same time directors noted that as is the case for all fund lending, including emergency financing, access under the FSW will be subject to debt sustainability and adequate capacity to repay requirements. Given concern that some countries may not be able to access the FSW, directors encouraged staff to work with countries in need to help address the challenges they are facing in meeting those requirements.
According to the World Food Programme (WFP) 2022 has been labelled as a year of unprecedented hunger.
The WFP highlighted that as many as 828 million people go to bed hungry every night, the number of those facing acute food insecurity has soared — from 135 million to 345 million — since 2019.
A total of 50 million people in 45 countries are teetering on the edge of famine.
While needs are sky high, resources have hit rock bottom. The WFP requires US$24 billion to reach 153 million people in 2022.
However, with the global economy reeling from the novel coronavirus pandemic, the gap between needs and funding is bigger than ever before.
The WFP stressed that unless the necessary resources are made available, lost lives and the reversal of hard-earned development gains will be the price to pay.