Heads of the International Energy Agency (IEA), International Monetary Fund (IMF), and World Bank Group have agreed to form a coordination group to maximise their institutions’ response to the energy and economic impacts of the war in the Middle East.
In a joint statement, they raised concerns that the Middle East war has caused major disruptions to lives and livelihoods in the region and triggered one of the largest supply shortages in global energy market history.
They noted that the impact was substantial, global, and highly asymmetric, disproportionately affecting energy importers, in particular low-income countries.
“It is already transmitted through higher oil, gas, and fertiliser prices, and is triggering concerns about food prices as well. Global supply chains—including helium, phosphate, aluminum, and other commodities—are affected, as is tourism due to flight disruptions at key Gulf hubs.
“The resulting market volatility, weakening of currencies in emerging economies, and concerns about inflation expectations raise the prospect of tighter monetary stances and weaker growth,” the statement issued on Wednesday partly read.
The institutions stated that at these times of high uncertainty, it is paramount to synergise forces to monitor developments, align analysis, and coordinate support to policymakers to navigate this crisis.
This, they said, is especially the case for countries that are most exposed to the downstream impacts from the war and those confronting more limited policy space and higher levels of debt.
“To ensure a coordinated response, we have jointly agreed to form a group that will assess the severity of impacts across countries and regions through coordinated data sharing on energy markets and prices, trade flows, fiscal and balance of payments pressures, inflation trends, export restrictions of key commodities, and supply chain disruptions,” the group said.
They further explained that the coordinated response mechanism may include targeted policy advice, assessment of potential financing needs and related provision of financial support (including through concessional financing), and use of risk mitigation tools as appropriate.
The institutions also noted that they would mobilise relevant stakeholders, including their multilateral, regional, and bilateral partners, to deliver a coordinated and efficient support to countries in need.
“The group will work with and draw on other international organizations’ expertise as needed. We are committed to working together to safeguard global economic and financial stability, strengthen energy security, and support affected countries and people on their path to sustained recovery, growth, and job creation through reforms,” the statement added.
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