Why the IMF says food subsidies shouldn’t go to everyone

Earlier this year, IMF President Kristalina Georgieva urged governments to subsidize rising food and energy prices “in a very targeted way”, with a focus on the poorest people. (via BBC). Now the fund has doubled down on that language, advising world leaders to think strategically about aid spending.

In a blog post, the IMF has warned world leaders of the economic risks of giving blanket aid to entire national populations rather than focusing on helping those citizens most at risk. Giving aid to large swaths of the population is putting additional strain on already unstable national budgets that are still reeling from pandemic relief costs, the organization has warned.

In response to recent food and fuel price hikes, more than half of the 134 countries studied by the organization have implemented large-scale tax cuts, price subsidies and direct cash transfers in response to the growing global financial crisis. To counter rising food prices and the resulting increase in food insecurity, the IMF has recommended that developed countries invest primarily in expanding social safety nets and domestic food production while implementing temporary economic measures, such as subsidized taxes on food imports, as a safeguard.

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