Further hike in interest rate by the central bank could prove suicidal for Pakistan

State Bank of Pakistan (SBP) is scheduled to announce a key monetary policy decision on May 23, 2022. The analysts and market participants keenly await SBP policy direction given Pakistan's economic uncertainty.

The consensus is growing in Pakistan that further hike in interest could prove suicidal for the country. The debt servicing by the Government of Pakistan (GoP) has become unsustainable. On top of that any hike in cost of doing business will dampen prospects of boosting exports. Let everyone remember that Pakistan suffers from cost-pushed inflation.

Since the last Monetary Policy announcement on April 07, 2022, secondary market rates including T-Bill/Kibor rates have gone up by around 200bps due to uncertainty about continuation of IMF program and removal of subsidies on petrol and diesel. 

It will also be interesting to see SBP’s stance as this will be the first monetary policy statement after the recent change in the government and appointment of Dr. Murtaza Syed as acting Governor of the central bank.

The most recent T-Bill auction tell a different story, the cut off yields declined for the first time after almost a year, down by 5nbs to 29bps with 3/6/12 months T-Bill yields clocking in at 14.49%, 14.70%, and 14.75% respectively.

For further clues let us go through some details of a survey conducted by Pakistan’s leading brokerage house, Topline Securities. Questions were asked on interest rate, inflation, currency, GDP growth and current account deficit outlook.

As per the survey results, around 54% of the participants expects an increase of 100bps, 14% of the participants anticipate an increase of 150bps and 11% expect an increase of 200bps or more. As against this 13% participants expect increase of 50bps and 9% expect no change.

Participants remained divided on policy rate expectations by end of FY23. 27% of the participants expect policy rate to close at 13% by end of next financial year. 41% of the participants expect it to above 13% while 32% anticipate it to be below 13%.

In terms of currency outlook, 39% of the participants expect PKR/USD to close above 205 by the end of next financial year. 9% believe it will remain in the range of 200-205 by FY23 end. 23% expect it to close in between 195 to 200 while the remaining anticipates it to be below Rs195.

27% of the participants are expecting inflation of 13-14% in FY23, 16% expect it to be between 14 to 15 percent, 4% anticipate it to be above 15%. The remainder of the respondents is eyeing an inflation of lower than 13% in FY23.

In terms of GDP growth, 7% of the participants think that GDP growth will be below 3% and 32% of them expects it to be between 3-3.5%, whereas 23% of the participants project it to be 3.5%-4.0%. The remainder of them anticipates it to be above 4%. 

Participants remained divided on the expectations of current account deficit forecast for FY23 as 46% participants expect current account deficit to be in the range of US$12 billion to US$15 billion while 18% participants anticipate it to above US$15 billion. The remainder of them expects it to be below US$12 billion.  

Pakistan is currently facing tough economic times as depleting foreign exchange reserves, rising fiscal deficit amid huge petrol/diesel subsidy and indecisiveness by the new government on key economic measures is exacerbating economic issues.

It will key for government to take the required reform steps including removal of subsidy on petrol/diesel, measures to curb imports and improve tax collection. This will pave way for the resumption of IMF program which currently remain stalled and will result in dollar flows that could ease pressure on currency and foreign exchange reserves going forward.

Given concerns highlighted above along with rising inflation and weakening currency, analysts anticipate SBP to raise the policy rate by 100bps.

 

Pakistan: Coalition on the path to collision

Pakistanis are getting jittery because of the ‘politically loaded’ statements from the ruling coalition as well as the opposition headed by Imran Khan. 

PTI Chairman on Sunday announced that his party's long march towards Islamabad for the country's "battle for real freedom" would begin on May 25, 2022.

He said the main demands for the march to the capital were the immediate dissolution of the National Assembly and announcement of a date for the next general election.

Khan wants to charge the mob by saying, "I want people from all walks of life to come because this is Jihad, and not politics. I've decided and told all my team that we have to be ready to sacrifice our lives."

Imran indicated that the march would convert into a sit-in and continue until his demands are accepted. "We will never under any situation accept them. No matter how long we have to remain in Islamabad we will remain there."

I am surprised at the logic and narrative of Khan. If he wants fresh elections, he should ask his party members (MNAs) to resign and the coalition will have no option but to go for fresh election.

I have a feeling that Khan fears that in case his party members resign the stage would be set for the creation of an interim government and elections would be deferred till completion of the electoral reforms.

PML-N-led coalition government appears unwilling to take the blame for any unpopular decisions it may have to take to fix the economy. It wants guaranteed backing of the powerful military establishment to help it see through the remaining period of its tenure till August 2023.

The coalition believes it can handle the PTI march if other things are sorted out with the establishment. Interior Minister Rana Sanaullah has expressed his wish to arrest Khan provided he gets the ‘go-ahead’, as he thinks even one day in prison would make the ousted premier forget politics.

It is highly regrettable that neither Khan nor Sharif understands the gravity of situation. Pakistan has to satisfy the International Monetary Fund (IMF) and seek the ‘fitness certificate’ to pave way for the immediate release of US$1 billion. This would be the preamble for release of funds by other multilateral financial institutions as well as friendly countries.

It is therefore suggested that the ruling junta should show some endurance and Khan should also support the incumbent government in the preparation and approval of the federal budget for the next financial, likely to be announced on June 10, 2022.

In my opinion even the most contentious issues should be discussed and resolved in the parliament and should not be taken to the streets. At present the top national priority is approval of the federal budget.  It is better that Khan and Sharif develop working relations at the earliest.

Pakistan: Shehbaz Sharif caught between a rock and a hard place

Reportedly, the PML-N-led coalition government appears unwilling to take the blame for any unpopular decisions it may have to take to fix the economy. It wants guaranteed backing of the powerful military establishment to help it see through the remaining period of its tenure till August 2023.

The coalition, despite pressure from within its ranks to clear the air about the possibility of early polls or taking unpopular decisions, is looking to the powers that can make its tenure peaceful. With each passing day, the government’s indecisiveness is taking a toll on the already sinking economy, as well as governance.

The current rulers appear reluctant to take up a ‘perceived offer’ from the establishment to enter into a bailout deal with the IMF, present the federal budget next month and immediately announce the date for polls.

This is a sticking point at the moment, the coalition parties are of the view that taking difficult decisions on the economic front for a short term will cost them dearly if elections are held early.

It appears that all allied parties have agreed on completion of the 15-month term. The problem is that if the IMF agrees, the economy can be revived. But raising petroleum prices does not seem acceptable. PML-N wants the support from ‘all sides’ to steer the country out of the crises, without being blamed for taking unpopular decisions.

Shehbaz Sharif, who has a reputation of being an efficient administrator, could not assert himself. His role seems to have been reduced to an ‘interlocutor’ among his elder brother Nawaz Sharif, the establishment and the coalition partners — PPP and JUI-F in particular.

Sharif looked very enthusiastic during the first couple of weeks after assuming charge, now seems to have lost the steam and is finding it hard to negotiate the difficult position his government finds itself in today.

The dire situation facilitates the ‘architect’ of the ruling coalition, PPP co-chairman Asif Ali Zardari, to once again reach out to the heads of all allied parties to come up with a fresh strategy. On Saturday, he called on Shehbaz Sharif and discussed the challenges in detail.

The meeting also assumed importance as Zardari flew in to Lahore from Islamabad in the backdrop of the denial of relief to Prime Minister Shehbaz from a special court in a money laundering case that declined to confirm his bail.

A brief statement issued after the over 90-minute meeting said, “The meeting discussed the current situation, especially the economy, in the country. The coalition partners expressed their complete confidence in the leadership of the premier and praised the incumbent government for its steps for the welfare of the people.”

The fast-changing political scenario, followed by ousted premier Imran Khan’s pressure through massive rallies and an impending long march on the capital, has forced the main players of the coalition to review the strategy they formed before toppling the PTI government early last month.

The coalition believes it can handle the PTI march if other things are sorted out with the establishment. Interior Minister Sanaullah has expressed his wish to arrest Khan provided he gets the ‘go-ahead’, as he thinks even one day in prison would make the ousted premier forget politics.

PML-N Vice President Maryam Safdar also voiced her father’s views on it, saying “Nawaz Sharif is ready to say goodbye to the government, but not pass on the economic burden to the people of Pakistan, as there is no point in carrying the weight of the blunders of Imran Khan. It’s better to go to the masses to seek a fresh mandate.”

The coalition government is likely to take a decision about whether to stay in government or go for fresh polls after its final ‘backdoor talks’ with the establishment next week. The perception is, “If things don’t work out, the coalition will immediately rush for electoral and accountability reforms and to announce the date for elections.

Will Pakistan default? May be yes, may be not

Lately, the question is getting louder, Will Pakistan default? The critics are distinctly divided into two groups, one saying may be and other saying may be not. Both the groups have their own premises and none can be termed right or wrong.

I am of the opinion that Pakistan has never defaulted in the past and it will never be allowed to default. As in the past, the country will be bailed out, on the eleventh hour. The IMF and all other multilateral institutions can’t afford an atomic power to commit default.   

I am of the opinion that at present Pakistan does not appear to be a circumstantial defaulter but indecisiveness of the incumbent coalition government, headed by Shehbaz Sharif is making it difficult for the lender of last resort, International Monetary Fund (IMF) to conclude the deal.

Without mincing my words I will say’, “Shehbaz Sharif does not understand gravity of the situation, he acting stubborn and many of his decisions can be termed self destructive”. My premise is based on his consistent refusal to increase electricity and gas tariffs and petroleum price.

I have spoken to some business leaders and even the common man on street says, “Pakistan has no option but to arrive at consensus with the IMF and get the next tranche released”. Saudi Arabia is willing to give US$3 billion, subject to release of the tranche by the IMF. Ironically, Shehbaz and his economic advisory team have failed in understanding this clue.

I tend to support the group which says, “Pakistan has the capacity to avert an eminent default”. The current balance of payment crisis is because of huge imports and paltry exports. The gap is being bridged by US$2.5 billion remittances received every month. Many of the critics fail to understand this blessing. Please recall “IMF has promised to give US$2 billion over the next two years, but overseas Pakistanis are sending US$2.5 billion per month”.

The next step is to curtail import by banning or imposing quantitative restrictions. The incumbent government has decided to curtail import which is praise worthy decision. However, it is committing a horrendous by opting for load shedding of electricity to curtail oil import bill. Outages in the industrial areas are affecting output, raising cost of doing business and eroding competitiveness of the Pakistani exporters.

One of the factors responsible for higher import of food items is rampant smuggling of these products to the neighboring countries. This smuggling can be stopped simply by allowing export of these items to Afghanistan, India and Iran. Both Afghanistan and Iran, also suffering from acute shortage of foreign exchange, are keen in entering into barter trade and/or trade in Pakistani currency.

Please allow me to say that if Shehbaz continue to live under the shadow of Nawaz Sharif and Ishaq Dar, he will sink deeper into the mess. He must listen to his coalition partners and make some difficult decisions. However, he has to get rid of his idiosyncrasies and behave like a real statesman.

Is Bangladesh heading toward a Sri Lanka like crisis?

According to a report in South Asia Journal, like Colombo, Dhaka has also taken on massive foreign loans to embark on what critics call ‘white elephant’ projects. The economic turmoil in Sri Lanka should serve as a cautionary tale for Bangladesh, say experts.

Soaring prices of essential items are bringing enormous pain to economically weaker sections of Bangladeshi society. Sri Lanka has been mired in economic turmoil over the past few months, with the country battling severe shortages of essential items and running out of petrol, medicines and foreign reserves amid an acute balance of payments crisis.

The resulting public fury targeting the government triggered mass street protests and political upheaval, forcing the resignation of Prime Minister Mahinda Rajapaksa and his Cabinet, and the appointment of a new Prime Minister.

Many in Bangladesh fear that their country could face a similar situation, given the rising trade deficit and foreign debt burden.

Bangladesh imported goods worth US$61.52 billion during the first nine months of the 2021-22 fiscal year, a rise of 43.9% as compared to the same period last year.

However, exports rose at a slower pace of 32.9% while remittances from Bangladeshis living abroad — a key source of foreign exchange — dropped about 20% in the first four months of 2022 from the year before, to US$7 billion.

Muinul Islam, a Bangladeshi economist and former professor at Chittagong University, fears that the trade deficit could grow in the coming years as imports are increasing at a faster pace than exports.

“Our imports are set to reach US$85 billion by this year, while exports won’t be more than US$50 billion. And, the trade deficit of US$35 billion can’t be bridged by remittances alone,” Islam told adding: “We will have to live with around a US$10 billion shortfall this year.”

The expert also pointed out that Bangladesh’s foreign exchange reserves have fallen from US$48 billion to US$42 billion over the past eight months. He is worried that they may drop further in the coming months, likely down another $4 billion.

“If the trend of more imports against exports continues and we fail to minimize the gap with the remittances, our foreign reserves will go down to a dangerous level in the next three to four years,” he stressed, underlining that this would lead to a significant devaluation of the nation’s currency against the US dollar.

Bangladesh, like Sri Lanka, has also taken on foreign loans in recent years to fund what critics call “white elephant” projects, which are expensive but totally unprofitable.

These unnecessary projects could cause trouble when the time comes to repay the debts, Islam said.

“We have taken a loan of US$12 billion from Russia for a nuclear power plant which has a production capacity of just 2,400 megawatts. We can repay the debt in 20 years but the installments will be US$565 million per year from 2025,” he pointed out. “It’s the worst kind of a white elephant project.”

In total, the country will likely have to repay US$4 billion per year from 2024, as installments for foreign loans, Islam estimated.

“I fear Bangladesh won’t be able to repay those loans at that time because of the shortage of income from the mega projects,” he stressed.

Prime Minister Sheikh Hasina’s government has taken several steps to slash spending and save foreign currency reserves.

Nazneen Ahmed, Bangladesh economist at the United Nations Development Program (UNDP) office in Dhaka, said that the government has to make sure the projects are completed without additional cost and delay.

“We have to finish the mega projects carefully. There is no room for negligence and corruption. Those projects should neither be delayed nor the existing budget be increased,” she said, adding, “If we can finish them on time, only then will we be able to repay the loans we have taken for them.”

Adding to the problems of debt and deficit is the surge in prices of essential items.

The Russia-Ukraine war, which began at the end of February, has compounded the inflationary pressure.

Bangladesh has been particularly vulnerable as the country imports significant amounts of goods like cooking oil, wheat and other food items, as well as fuel.

Ahmed said that poor people are suffering the most because of the skyrocketing prices of these items.

“The government has to offer commodity goods subsidized to the poor people. Additional financial support should also be provided to them under a social security system,” she noted.

But the expert remains optimistic about the South Asian nation’s prospects, saying that the current economic indicators could improve as the global economy recovers from the COVID pandemic-induced downturn.

“We have been observing inflation worldwide during the COVID recovery phase. The Ukraine war has added more uncertainty to it. And the economic crisis in Sri Lanka has also created fear among us,” she told adding, “Still, if nothing big happens within the next few years, the global economy will recover again.”

Prime Minister Sheikh Hasina’s government has taken several steps to slash spending and save foreign currency reserves.

It has decided to suspend foreign trips of officials and postponed some less important projects that require imports from other countries.

Hasina has also urged citizens to do their bit, by practicing austerity and being careful about spending decisions.

“The Prime Minister earlier gave some directives to the government officials on practicing austerity. She called upon the private sector and the people to be economical,” Bangladesh’s Planning Minister M A Mannan said during a press conference in Dhaka.

Islam said that the government needs to be extremely careful with economic management, given the widespread suffering on account of soaring price rises, which could aggravate the already high political tensions in the Muslim-majority country.

“Bangladesh’s last election was not good. It was a fraudulent one. Another national election is due in the next two years. So the political situation will remain tense anyway. The economic uncertainty could fuel it even more.”

While the experts don’t see any imminent economic crisis, they believe that good governance and financial management are needed to ensure Bangladesh doesn’t end up facing a situation that Sri Lanka now finds itself in.

 

US strategy of maintaining strategic stability in Southern Asia

According to a report by United States Institute of Peace, over the past decade, long-standing disputes between the nuclear-armed states of Southern Asia have repeatedly veered into deeper hostility and violence. 

These regional developments reflect and reinforce new and significant geopolitical shifts, starting with the global strategic competition between China and the United States.

In Southern Asia, relations between the United States and Pakistan have frayed even as United States-India and China-Pakistan ties have strengthened. The region now faces deepening and more multifaceted polarization. Global competition adds fuel to regional conflict and reduces options for crisis mediation.

This report reviews the challenges posed by changing strategic circumstances in Southern Asia, assesses a range of US policy options, and presents a set of priority recommendations for US policymakers.

China, India and Pakistan have developed nuclear capabilities as one way to deter conflict with more powerful adversaries: the United States, China, and India, respectively. Each of the states in Southern Asia is expanding its nuclear arsenal and investing in related delivery systems. All aspire to field nuclear triads with assured second-strike capabilities, but China, India, and Pakistan are at very different stages in this process.

In making these investments in national security, each state also threatens its less powerful rivals. The result, a ‘cascading security dilemma’, encourages arms racing, disrupts regional strategic stability, and heightens the risk that crises could cross the nuclear threshold.

In addition to general arms race dynamics, the introduction of new munitions, more capable delivery systems, and potentially more risk-acceptant doctrinal shifts tend, on balance, to exacerbate strategic instability in Southern Asia.

Sophisticated missile defense systems; hypersonic and multiple independently targetable reentry vehicle (MIRV) missiles; and tactical, sea-based (surface and submarine), and dual-capable nuclear systems all raise new challenges for crisis management and raise questions about how they might influence the nuclear strategies and doctrines of regional states. 

The potential for conflict between India and Pakistan remains high following the 2019 Pulwama-Balakot crisis. Subsequent diplomacy led to the resumption of a ceasefire along the Line of Control in 2021, but the underlying causes of hostility, including although not limited to the disputed territory of Kashmir, remain.

Moreover, India and Pakistan appear to have drawn lessons from 2019 that increase the likelihood that future crises could escalate in dangerous ways, possibly even to the nuclear threshold.

All told, 2019 showed important shifts in long-standing positions (by India and Pakistan, as well as China and the United States) and a new willingness by all parties to accept greater risk.

Over the past several years, India’s relations with China have also deteriorated markedly. In the summer of 2020, their long-disputed land border saw the most violent clashes in more than four decades. India and China have since pulled forces away from hot conflict but have not found a way back to the pre-2020 status quo.

Both are actively investing in new military capabilities and infrastructure along their inhospitable Himalayan frontier, raising the prospect that future disputes could escalate into even more significant conventional military exchanges.

Nuclear use remains unlikely, but it cannot be ruled out, if only as the unintended consequence of conventional military escalation. India-China border tensions are certain to influence their broader bilateral relationship as well as military investments, both conventional and nuclear.

In addition to worrisome trends in bilateral India-Pakistan and India-China relations, India faces the thorny challenge of managing relations with two hostile neighbors (China and Pakistan) that are increasingly close partners.

Other regional developments, including in Afghanistan, where Taliban rule is likely to create new opportunities for terrorist groups, further threaten strategic stability in Southern Asia.

Ultimately, it is the unpredictable evolution of these dangerous dynamics in combination—India-Pakistan crises, China-India border violence, and resurgent terrorist threats—that should raise concern that inevitable flare-ups could spiral.

The United States has only a limited capacity to influence the behavior of other nuclear-armed states. The overlapping and interconnected rivalries and territorial disputes in Southern Asia further complicate the policy challenge facing Washington.

In particular, US policymakers will need to balance competing strategic priorities as they deepen the strategic partnership with India and deter aggression while taking care to avoid actions that could contribute to a regional arms race, greater instability, or crisis escalation.

That said, the United States has in the past played a significant role in regional crisis prevention and mitigation and continues to have a wide range of policy tools at its disposal.

This report systematically assesses a range of options for resolving, mitigating, or better managing regional disputes; enhancing regional strategic stability through deterrence, reassurance, and other diplomatic or technical means; and improving crisis management tools and practices to reduce the likelihood that any specific crisis escalates past the nuclear threshold.

This assessment is not intended to be a one-time effort. As the United States faces new and evolving circumstances, it should continue to develop policies to address the motives, new capabilities, and processes that expose Southern Asia to a significant risk of nuclear war.

To resolve or mitigate core disputes in Southern Asia that threaten regional peace, the United States should continue to pursue diplomatic initiatives to encourage reduced tensions between India and Pakistan. It should also prepare to seize opportunities for tactical progress, for instance, on ways to remove forces from specific points of friction, such as the Siachen Glacier, even if core disputes prove intractable.

The United States should support long-term regional economic development projects to build material incentives and more vocal constituencies favoring regional peace.

Additionally, the United States should look for new diplomatic opportunities to manage India and China’s border dispute, including in US talks with China as well as coordination with US allies and partners to develop new economic and financial tools aimed at deterring Chinese territorial aggression.

The United States should use its ongoing negotiations with the Taliban and economic and financial leverage with Pakistan to reduce threats to regional stability posed by terrorists based in Afghanistan and Pakistan, in particular by naming anti-Indian terrorists as priority US concerns and targets.

To enhance prospects for strategic stability in Southern Asia, the United States should devote renewed attention to nuclear risk reduction measures, starting with the establishment of a dedicated, secure, and redundant India-Pakistan nuclear hotline, supported by bilateral agreements and practices, and should urge both India and China to enter strategic stability talks with each other.

Additionally, the United States should raise the idea of a new transregional forum on regional and global strategic stability that would include an “N-7” (China, France, India, Pakistan, Russia, the United Kingdom, and the United States) to discuss and strengthen stabilizing nuclear norms.

Washington should also deepen its defense cooperation with New Delhi in ways that contribute to India’s capacity for territorial defense and a stabilizing conventional and nuclear deterrent without exacerbating the regional arms race or increasing the likelihood of nuclear crises.

To better manage crises between the nuclear-armed states of Southern Asia, the United States should prepare its policymakers for complex nuclear crisis diplomacy in the region by conducting gaming exercises within the intelligence community; developing a generalized policy playbook for India-Pakistan, India-China, and overlapping India-Pakistan-China crises; and routinely sharing insights from these planning documents with all incoming senior officials in relevant US government agencies, embassies, and bases.

Additionally, Washington should work to improve its indicators and warning for regional crises and prepare to share information publicly and with regional actors to combat disinformation in instances where doing so could prevent or de-escalate a conflict.

It should offer to help New Delhi enhance the resilience of its information and communications channels. It should also coordinate with trusted third parties to better prepare for crisis diplomacy so that they can serve as intermediaries and honest brokers in future crises.

 

International Financial Institutions plan to address food insecurity

Kristalina Georgieva, Managing Director, International Monetary Fund (IMF) has made a statement following the publication of a Joint International Financial Institution (IFI) Plan to Address Food Insecurity.

Russia’s invasion of Ukraine has precipitated serious economic and social consequences around the globe. Among them, many countries are now facing dangerous food shortages and sharply higher prices for food, energy, and fertilizers. 

These pressures occur at a time when countries’ public finances are already stretched from the pandemic and public debt burdens are high. With inflation reaching the highest levels seen in decades, vulnerable households in low- and middle-income countries are most at risk of acute food insecurity. And history has shown that hunger often triggers social unrest and violence.

If we have learned one lesson from the 2007-08 food crisis, it is that the international community needs to take fast and well-coordinated actions to effectively tackle a food crisis, by maintaining open trade, supporting vulnerable households, ensuring sufficient agricultural supply, and addressing financing pressures. I am honored to have been able to work together with the heads of other International Financial Institutions to propose concrete actions. Coordination between us will be critical for the plan to have maximum impact in quickly alleviating food insecurity, especially for the most vulnerable households in the most vulnerable countries.

Working closely with the World Bank and other International Financial Institutions, the IMF will provide policy advice, capacity development assistance, and financial support to catalyze and complement financing from other institutions. The IMF is investing in its monitoring capacity to allow for timely identification of countries with the most pronounced financing pressures, especially fragile and conflict-affected states, which will particularly be affected by food insecurity.

The IMF is working with country authorities on macroeconomic frameworks and policy priorities. A critical area of focus is to assist countries in their efforts to rapidly improve social safety nets to protect vulnerable households from the imminent threat of hunger. Helping members identify ways to safeguard food security without resorting to export restrictions has been another priority. These policy objectives are reflected in the IMF’s program engagement. IMF financial support for Moldova (recently augmented to help address the harmful effects of the war) and Mozambique, for instance, includes a focus on strengthening social safety nets for vulnerable households.

The IMF will also bring to bear its new Resilience and Sustainability Trust, which will provide affordable longer-term financing for countries facing structural challenges, while countries with acute financing needs could access IMF emergency financing, where appropriate. The IMF is intensifying efforts with the World Bank and others to support debt restructurings where needed.”

Background: Following a meeting of International Financial Institutions (IFIs) and global leaders convened by the US Treasury on April 19, 2022, “ Tackling Food Insecurity: the challenges and call to action,” the International Monetary Fund (IMF), the African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), Inter-American Development Bank (IDB), the World Bank, and the International Fund for Agricultural Development (IFAD) have worked together to formulate a joint action plan to address food insecurity.

According to the plan, the IFIs will pursue actions to step up, surge, and scale their work across six priority goals: 1) support vulnerable people; 2) promote open trade; 3) mitigate fertilizer shortages; 4) support food production now; 5) invest in climate-resilient agriculture for the future; and 6) coordinate for maximum impact.