Global Food Crisis and Food Shock Window - Frequently Asked Questions

October 4, 2022

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Q1. How is the IMF helping countries respond to the global food crisis?

The IMF provides policy advice, capacity development, and financial support to help member countries tackle the global food crisis. Nearly 50 countries are severely affected by the global food crisis; those experiencing severe macroeconomic challenges, weak institutions, and a fragile socio-political environment are most vulnerable. The Fund is working closely with partners to strengthen the international response, including the World Bank, the World Food Program, the World Trade Organization, and the Food and Agriculture Organization.

In response to the global food crisis, the Fund is helping countries by:

Identifying pressures and helping countries formulate effective policies. The Fund provides policy advice to member countries impacted by the global food crisis. By combining information on the balance of payments impact of higher food and fertilizer prices with insights on vulnerabilities and risks –including debt sustainability—the Fund helps identify the countries that are most likely to encounter acute financing pressures and advises country authorities on policy responses. For example, our policy advice can help countries address food insecurity by strengthening social safety nets and also avoid export restrictions.

Providing financing to support country responses to the global food crisis. Fund financing is helping countries meet balance of payments needs associated with the global food shock. Since Russia’s invasion of Ukraine, new Fund-supported economic programs in Benin, Cabo Verde, Georgia, Mozambique, Tanzania, and Zambia, included policies to address the impact of the food crisis. Additional financing for existing programs in Jordan, Moldova, Pakistan, and Senegal provided support to strengthen social safety nets and help countries address BOP problems associated with food insecurity.

In addition, the new Food Shock Window provides increased access under emergency financing instruments for countries that have urgent balance of payments needs associated with acute food insecurity, the rising costs of food and fertilizer imports, or substantial cereal export shortfalls.

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Q2. What are the key features of the new Food Shock Window?

The Food Shock Window under the emergency financing instruments, the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) approved by the Executive Board on September 30, 2022 and will be open for 12 months.

  • Objective. This new window will provide additional access under these instruments to countries that face urgent balance of payments needs associated with the global food shock, for which a UCT-quality program is either not currently feasible or not necessary.
  • Eligibility. The Food Shock Window is available to IMF member countries that have an urgent balance of payments need related to the global food shock. Specifically, the window will be available to countries that are suffering from acute food insecurity, a sharp food imports shock, or from a cereals export shock. The assessment of the qualification conditions outlined above necessarily involves country-by-country assessment and judgment.
  • Financing terms. The financing terms are the same as for the other emergency financing. Access under the FSW of the RCF for low-income countries would be at concessional (PRGT) terms. Financial assistance through the FSW under the RFI and RCF should be repaid within 3¼ to 5 years, and 5½ to 10 years, respectively, as is the case for other windows under the RFI and RCF.
  • Access. Access will be consistent with the actual balance of payments needs, and capped at 50 percent 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, previously at 150 percent of quota, will be increased to 175 percent of quota for members that will borrow through the FSW.
  • Availability. The window is now open. It is available for 12 months through September 29, 2023.

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Q3. What is the purpose of the Food Shock Window?

  • The impact of the food shock is felt everywhere. About 50 countries are particularly vulnerable to the food and fertilizer price shock, most of which also suffer from acute food insecurity, according to IMF staff estimates. About half of those are especially vulnerable due to severe economic challenges, weak institutions, and fragility.
  • For the most impacted countries, grants and concessional financing from partners are the first lines of defense. The Food Shock Window offers an additional line of defense in the form of IMF support to help address urgent balance of payments needs related to the global food shock.