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The head of the International Monetary Fund has encouraged countries to consider ways to conserve energy, warning that the impact of the Iran war will linger even once the conflict ends.
Kristalina Georgieva told reporters in Washington DC that countries should consider measures to cut energy demand, such as free public transport or encouraging working from home.
Georgieva warned countries against taking untargeted actions such as broad energy subsidies to offset the impact of higher prices, saying they would only “prolong the pain of high prices.”
She warned that there are shortages of oil and gas, naptha, helium and other products in Asia, and expressed concerns about the risk of higher food price inflation unless fertilizer delivery at reasonable prices resume soon.
Georgieva also advised central banks to resist the urge to hike interest rates in response to the Middle East crisis, while also suggesting that those with low credibility may need to act faster.
She was speaking at the IMF’s spring meeting, where the Fund also warned that global debt levels continue to rise, and could be pushed highed by the Iran war.
In its half-yearly fiscal monitor, the IMF said global debt levels were on track to increase because the war was pushing up the price of energy and food, fuelling higher government borrowing costs, and hitting economic growth.
After a rise in gross government debt levels to almost 94% of GDP last year, it warned this figure was on track to reach 100% by 2029, a level previously reached only in the aftermath of the second world war.
But the IMF did applaud the UK’s efforts to bring down its budget deficit.
That might cheer chancellor Rachel Reeves, who has also been busy in Washington DC today.
Reeves has stepped up her criticism of Donald Trump’s war on Iran, describing it as a “mistake” that has destabilised the global economy and damaged living standards around the world.
Reeves calls Trump’s Iran war a ‘mistake’
Rachel Reeves has stepped up her criticism of Donald Trump’s war on Iran, describing it as a “mistake” that has destabilised the global economy and damaged living standards around the world, my colleague Richard Partington reports from Washington DC.
In a marked fraying of the transatlantic relationship, the UK chancellor said Trump breaking off from diplomatic talks with Iran and launching airstrikes had not made the world a safer place.
“I think it was a mistake to end those [talks with Iran] and to enter into conflict, because I’m not convinced that we are safer today than we were a few weeks ago,” she told an event in Washington.
The comments on the president’s home turf reinforce comments Reeves made just before flying out on Tuesday, when she expressed frustration at the “folly” of his decision to go to war without a clear exit plan.
Speaking as she prepared to meet finance ministers from around the world, Reeves said the war and particularly the halting of Gulf shipping was damaging the living standards of families and businesses in the UK and the US.
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