The International Monetary Fund (IMF) has urged African Central Banks to remain vigilant and prepare to act against inflationary pressures from the Middle East conflict.
The Fund said a 10% increase in oil prices sustained throughout the year could raise global headline inflation by 40 basis points, with import‑dependent African economies facing amplified impact.
Speaking at a press briefing on Thursday, March 19, Director of the IMF’s Communications Department, Julie Kozack, said the prolonged conflict would create new risks for the region
“Some countries in the region are heavily reliant on imports. That means that their import costs are going to go up, and it may place pressure on their balance of payments,” she said.
She explained that risks would be transmitted through commodity price channels, including oil, gas, fertiliser and food, raising costs for import‑driven economies
Exporting countries, she noted, could benefit from higher prices through increased foreign currency inflows.
Ms Kozack said disruptions to energy supplies, including the closure of the Strait of Hormuz and damage to Gulf infrastructure, had already driven oil and gas prices up by more than 50 per cent in the past month, creating headwinds for African economies.
She said that higher energy prices could push up headline inflation, while tightening global financial conditions might restrict access to international capital markets and raise borrowing costs
Ms Kozack noted that vulnerable economies still recovering from COVID‑19, the 2022 food and energy crisis, and climate shocks faced “a potentially devastating setback.”
“It is for Central Banks to be vigilant, looking at second round effects potentially on inflation, and to keep an eye also on what’s happening with inflation expectations,” She stated.
Ms Kozack cautioned that while tightening monetary policy could risk recession, unemployment and poverty, failing to act decisively could entrench inflation
She urged Central Banks “to navigate extraordinarily difficult trade‑offs.”
Ms Kozack said the IMF stood ready to support countries facing challenges and would provide a comprehensive assessment of regional impacts in its April World Economic Outlook, including scenario analyses on conflict duration and commodity price trends.
Source: GNA
