IMF: 12+ countries may seek new loans as war drives energy shock and supply disruptions
IMF chief Kristalina Georgieva says at least a dozen countries could request new loan programmes as Middle East war disruptions push up energy costs and strain supply chains, with demand for IMF support estimated at US$20-50bn.
The International Monetary Fund (IMF) expects at least a dozen countries to seek new loan programmes to cope with surging energy prices and supply chain disruption caused by the Middle East war, Managing Director Kristalina Georgieva said on Wednesday.
Speaking during the IMF and World Bank spring meetings in Washington, Georgieva said the closure of the Strait of Hormuz could deepen supply disruptions even if the conflict ends quickly, urging governments to take steps to reduce fuel consumption.
Georgieva repeated the IMF’s estimate that war-related disruption could trigger US$20 billion to US$50 billion in new financing needs, which could include fresh loans and expansions of some of the IMF’s 39 existing country programmes. She did not name countries requesting support, but said the IMF was not currently discussing an expansion of Egypt’s US$8 billion programme despite the war’s impact.
IMF strategy chief Christian Mummsen said the estimate was prepared before the meetings began and could increase after bilateral talks with member-country finance officials. He described the assessment as preliminary and said the list of countries seeking support would likely grow beyond a dozen.
Supply shocks may linger
Georgieva said she was concerned about a physical breakdown in supply chains, especially for Asian economies dependent on Gulf inputs including oil, natural gas, naphtha, helium and fertiliser. She warned the impact would not disappear quickly, noting that shipping delays mean disruption can continue even after a ceasefire.
The IMF has already said global conditions are worsening beyond those assumed in its latest outlook. Chief economist Pierre-Olivier Gourinchas said the world economy is drifting towards a more adverse scenario, with 2026 growth potentially falling to 2.5% and oil averaging around US$100 a barrel. In a severe scenario of a deeper, longer conflict, global growth could fall to 2%, close to a global recession.
IMF urges conservation and targeted support
With more shortages looming, the IMF urged countries to conserve energy and reduce oil intensity, including temporary incentives such as making public transport free. Georgieva again warned against broad, untargeted energy subsidies, saying they would only prolong the pain of high prices.
The IMF’s Fiscal Monitor also urged governments to avoid blanket subsidies and instead use targeted, temporary cash transfers to protect vulnerable households without obscuring higher fuel prices or boosting demand. Fiscal Affairs Director Rodrigo Valdes warned that trying to offset a supply shock by propping up demand risks higher inflation.
Central banks told: stay vigilant, don’t rush
To prevent a 1970s-style wage-price spiral, the IMF said central banks should remain vigilant but avoid rushing into tighter policy immediately. Georgieva said credible central banks should signal a commitment to price stability while waiting to see how conditions evolve, while those with less credibility may need stronger action.
Mummsen added that fertiliser shipment delays and cancellations are hitting developing countries hard, with some estimates suggesting 45 million more people could face food insecurity. He noted low-income countries spend around 36% of consumption on food, compared with about 20% for emerging markets and 9% for advanced economies—making food price shocks especially damaging.
Source: Reuters
