<\/p>\n
A new IMF Global Policy Tracker shows that nearly 900 policy measures have been introduced across around 170 countries since the start of the Middle East conflict, with most aimed at cushioning households and businesses from rising energy costs.<\/p>\n
<\/p>\n
The IMF said fiscal measures dominate the global response, particularly subsidies and tax cuts designed to limit the impact of higher fuel prices. However, the Fund cautioned that many of these interventions are broad, untargeted and introduced without clear exit strategies.<\/p>\n
<\/p>\n
The IMF noted that policy approaches broadly mirror those used during the 2022 energy crisis, but warned that economic conditions have since changed.<\/p>\n
<\/p>\n
Many countries now face higher debt burdens and tighter fiscal space, making the cost of prolonged support more difficult to sustain.<\/p>\n
<\/p>\n
In advanced economies, subsidies to energy producers and distributors account for nearly half of all measures, while tax reductions make up a significant share of the remainder.<\/p>\n
<\/p>\n
In contrast, emerging and developing economies have adopted a more diverse mix of policies, including price controls, supply-side interventions and demand management measures such as rationing.<\/p>\n
<\/p>\n
African countries have relied more heavily on pricing controls and supply adjustments, while some Asian economies have introduced conservation measures and limits on consumption.<\/p>\n
<\/p>\n
The IMF said countries with weaker fiscal positions are more likely to rely on administrative controls and demand suppression rather than direct subsidies.<\/p>\n
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However, the IMF warned that such measures carry risks, particularly if applied for prolonged periods.<\/p>\n
<\/p>\n
Broad subsidies and price caps can quickly become expensive, especially if global energy prices remain elevated. In some cases, hidden costs may also emerge, particularly for state-owned energy companies forced to absorb losses.<\/p>\n
<\/p>\n
The IMF also raised concerns about the broader economic impact of widespread price controls.<\/p>\n
<\/p>\n
When many countries simultaneously shield consumers from price increases, global demand remains higher than it would otherwise be, potentially prolonging supply pressures and keeping prices elevated.<\/p>\n
The Fund warned that this could amplify the overall shock.<\/p>\n
<\/p>\n
Another key concern is the difficulty of scaling back support once it has been introduced.<\/p>\n
<\/p>\n
Temporary measures often become politically difficult to reverse, especially if consumers and businesses become reliant on them. The IMF said this could limit governments\u2019 ability to respond to future crises.<\/p>\n
<\/p>\n
\u201cBy spending more freely now, governments will limit their scope to take further action,\u201d the report noted.<\/p>\n
<\/p>\n
The Fund outlined an alternative approach, urging governments to prioritise targeted support rather than broad price controls.<\/p>\n
<\/p>\n
Allowing prices to adjust while protecting vulnerable populations through well-designed interventions is seen as more sustainable over the long term.<\/p>\n
<\/p>\n
The IMF said some countries have already begun to scale back subsidies and allow market pricing to take effect, although such decisions can be politically challenging.<\/p>\n
<\/p>\n
Ultimately, the IMF emphasised the need for disciplined policymaking in an uncertain global environment.<\/p>\n
<\/p>\n
The IMF said maintaining fiscal flexibility is essential, warning that resources used to cushion current shocks may be needed for future crises.<\/p>\n
<\/p>\n
\u201cProtect people, not prices,\u201d the IMF said, highlighting the importance of targeted support over universal subsidies.<\/p>\n
–IMF\/ChannelAfrica–<\/p>\n","protected":false},"featured_media":37541,"template":"","meta":{"_acf_changed":false},"news-type":[44],"class_list":["post-37540","news","type-news","status-publish","has-post-thumbnail","hentry","news-type-finance","entry"],"acf":{"short_description":"The International Monetary Fund (IMF) has warned that government responses to the recent energy shock risk becoming costly and difficult to reverse.","published_date":"","news_description":"The International Monetary Fund (IMF) has warned that government responses to the recent energy shock risk becoming costly and difficult to reverse.","form_embed":"","author":"","image_caption":""},"_links":{"self":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/37540","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news"}],"about":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/types\/news"}],"version-history":[{"count":1,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/37540\/revisions"}],"predecessor-version":[{"id":37542,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/37540\/revisions\/37542"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media\/37541"}],"wp:attachment":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media?parent=37540"}],"wp:term":[{"taxonomy":"news-type","embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news-type?post=37540"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}