Thursday 16 April 2026 – 04:46 PM
In monetary policy, markets expected major central banks to tighten their policy stances. Here we see 4 main paths for policy interest rates implied by market expectations, each path showing an upward shift.
In the area of energy policy, we see many countries introducing emergency conservation measures – from public campaigns, to limits on the use of private vehicles, to telecommuting. These steps and others are well documented in the IEA’s energy policy tracker.
I would add that sharing this information underscores why we are joining forces with the IEA and the World Bank to form a coordination group in which the Fund will lead on macroeconomic matters.
Finally, returning to fiscal policies, we see that most countries have taken appropriate action by avoiding untargeted tax cuts, untargeted energy subsidies, and price-based measures, although some have chosen to provide broad support. Again, see the IEA summary.
We will point out that measures that weaken the signal from prices also weaken the necessary response on the demand side, which results in higher global energy prices. We will work with countries to help them target their fiscal support and establish effective sunset clauses for temporary measures. As we do so, we will also stress the importance of fiscal policies not colliding with monetary policies.
The world has already seen a rise in benchmark yield curves, raising the cost of debt, and adding a deficit-financed stimulus to the mix at this time would increase the burden on monetary policy, amplifying these shifts. It will be like driving with one foot on the accelerator and the other on the brake, which is not good.
As we will point out in the ongoing Fiscal Monitor report, the world suffers from a fiscal space problem. Public debt is generally much higher than it was 20 years ago, including in most G20 countries, reflecting the widespread neglect of fiscal consolidation during periods when conditions permitted it.
As a result, interest payments as a share of income are increasing at all income levels and the implications are clear: all countries must use their limited public finances responsibly, and most must move decisively to rebuild fiscal space after this shock. I can only stress this so strongly.
I turn to financial sector policies. As the Global Financial Stability Report will confirm, it is essential for regulators and supervisors to be vigilant, quick to act and act in the face of a volatile situation.
Financial conditions have been very accommodative for some time, driven by optimism about technology and new financial intermediaries, including many non-bank institutions. Although this raised growth, it also created risks of a reversal. If investors start to worry that energy insecurity will hinder the growth of artificial intelligence, for example, given its enormous energy needs, we could find ourselves in trouble.
Micro and macroprudential policies must reduce risks to financial stability and ensure system resilience. In doing so, I would like to emphasize the most important lesson we have learned: that good policies make a difference. There are forces that countries cannot control, but they have power over their policies and institutions.
And pay attention: the strength of your economic fundamentals and the speed with which they adapt are your best defense when shocks occur – and they are inevitably coming. As you deal with the long-term consequences of the current shock, do not forget to guide major global shifts in technology, demographics, geopolitics, trade, and climate, and build a better future. Productivity and long-term growth depend on your choices about structural and regulatory policies, and growth potential is very important for stability. For us at the IMF, your support in building strong policies and institutions is our reason for being. As a rescue agency, we are here for you when crises strike.
Once again, let’s look at the world’s most vulnerable oil-importing countries, the speculative ones, and color blue all the countries that have IMF-supported programs. We can ramp up these programs if necessary, and more programs are sure to come.
Given the repercussions of the Middle East war, we expect in the near term an increase in demand for IMF support for the balance of payments, ranging between $20 and $50 billion, and the lower value will be achieved if the ceasefire continues.
There are two points worth noting here. The first is that this range could have been much higher had it not been for sound policymaking in many emerging market economies, including some of the largest, over decades. Second: We have sufficient resources to confront this shock.
So, yes, our 191 member countries can count on us to support them with funding if necessary. They can count on us to pull them together to find a way forward amidst the fog of uncertainty. This is the topic currently up for discussion. We hope for lasting peace in the Middle East and everywhere, because wars sweep away everything we work for.
Kristalina Georgieva
Director General of the International Monetary Fund
