Prices will still rise

Global economic slowdown not enough to stop inflation

The wave of rising inflation sweeping the world may require the International Monetary Fund to revive its lending activities. As the first deputy head of the IMF, John Lipsky, said recently, the fund is now actively negotiating with 10-15 low-income countries about the possibility of financing gaps in the balance of payments associated with rising prices.

Lipsky made the announcement in a speech to the Council on Foreign Relations on May 8 in New York. He confirmed earlier IMF assessments that global inflation is replacing a long period of price stability. At the same time, Lipsky emphasized that it is too early to say that the rise in prices is based on inflation expectations and reflects the beginning of overheating of the global economy. The fund's specialists do not expect a repeat of the global inflation of the 1970s and are in this sense optimists, although they do not dismiss a more pessimistic point of view. As noted by Reuters, Mr. Lipsky's remark has raised concerns in financial markets that the current slowdown in economic growth will ultimately not be enough to ease price hikes in commodity markets.

The structural policy measures that Lipsky believes should be adopted are not new. Thus, he emphasized the need to promote investment in the oil sector. Producing countries, according to the IMF official, must ensure that investment regimes are stable and predictable, and encourage cooperation between national and international oil companies through well-designed partnerships, as well as ensure good dissemination of supply and demand data. Similar wishes were expressed in a harsher tone at the G8 level, but influencing oil producers is not so easy. Lipsky also proposes reducing the level of protectionism and subsidies aimed at stimulating biofuel production . As is known, it was the increased use of various crops for the production of biofuels that led to imbalances in the agricultural sector and shortages of some food products. In return, the deputy head of the IMF proposes to focus on energy conservation and measures to improve energy efficiency.

As for the agricultural sector itself, Lipsky advises most developing countries to modernize infrastructure, distribution and storage systems for agricultural products and concentrate subsidies on the production of key products and key related products, in particular fertilizers. At the same time, Lipsky considers subsidies to the agricultural sector to be the privilege of developing countries: in developed economies, he says, subsidies should be gradually reduced so as not to suppress incentives for production in developing countries.

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The IMF Board of Governors at the ministerial level of the organization's member countries has approved key elements of the fund's new income model. According to the IMF press service, we are talking primarily about expanding the powers of the fund administration to invest its assets. The press release indicates that 176 of the 185 countries that are members of the IMF unanimously voted for the proposed innovations. The need for reforms is dictated by the fact that in recent years the demand for IMF loans, which traditionally served as its main source of income, has been declining in the world. Now it has been decided to switch to a new self-financing model. For this purpose, in particular, it is planned to sell over 400 tons of gold from the IMF reserves, and place the proceeds in a special fund, from which funds will be invested. However, this will still require a separate decision by the member countries of the organization, including at the legislative level. At the same time as modernizing the revenue system, the fund is reducing operating expenses. ITAR-TASS

Ivan GORDEEV