Global action needed to prevent food crisis in Middle East and North Africa, warns IMF
In an exclusive interview, Jihad Azour, director of the fund’s Middle East and Central Asia Department, says rising prices risk social stability in lower-income countries
Gathering international co-operation will be necessary to help prevent a food crisis in the Middle East and North Africa this year as the war in Ukraine drives prices higher and risks supply, the IMF’s regional director said.
On Wednesday, the fund released its Middle East and Central Asia Regional Economic Outlook, which shows a divergent picture in 2022 for the region, with oil exporters such as the UAE and Saudi Arabia set to earn higher revenue this year compared with 2021, thanks to higher oil prices.
Uncertainty is also increasing with the duration of the war in Ukraine, a significant factor in how the rest of Mena will fare amid rising inflation and growing food insecurity.
Jihad Azour, director of the Middle East and Central Asia Department at the IMF, told the Business Extra podcast that co-operation is required at both the regional and global levels to increase access to food supply, especially for the most vulnerable nations such as Yemen, Sudan and Afghanistan.
“[Co-operation] should be at both levels; global in order to secure that supply is not constrained and allow those who are food-dependent countries to remain able to have access to these basic commodities. Co-operation is also very useful to reduce the impact of uncertainty on prices of those basic commodities,” said Mr Azour.
The IMF said higher wheat prices alone could increase external financing needs in the Middle East and Central Asia by up to $10 billion this year. Supply shortages originating in Russia and Ukraine — together accounting for about a quarter of global wheat exports — would endanger food security, particularly for low-income countries, which may also suffer from aid diversion, the fund said.
The UN Food and Agriculture Organisation’s food price index shows sharp increases for grains, oils and other foodstuffs as exports from both Ukraine and Russia are affected.
It is crucial that all countries “fight inflation, because inflation is a tax that affects more the poor than the high-income people”, said Mr Azour. Last year, inflation ran at 14.8 per cent in Mena, the IMF said.
Low-income countries have very limited reserves of staple items, in terms of both duration and quantity, he said, which adds to the risk in these countries that rising prices will create social instability.
“Therefore, it’s very important to maintain global co-operation. And the role of institutions is important. It’s very important to provide also support to countries who need it,” Mr Azour said.
Throughout the region, this is also a moment “to improve social protection mechanisms, make them more targeted [and] allow the low-income groups to have at least the floor of social protection”.
In contrast, oil and gas exporters in the Middle East will benefit from higher energy prices, and their growth this year was projected by the IMF at 5.4 per cent versus 4.4 per cent and 1.1 per cent for middle and low-income countries, respectively.
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