By Andrea Shalal
WASHINGTON, April 9 (Reuters) – International Monetary Fund chief Kristalina Georgieva on Thursday said the global lender expected near-term demand for IMF financial support to rise to between $20 billion to $50 billion as a result of spillovers from the war in the Middle East.
Georgieva said the now-paused war was testing the global economy, with a 13% cut in the daily flow of the world’s oil and a 20% cut in liquefied natural gas triggering a supply shock that had sent energy prices soaring, while disrupting supply chains.
Speaking at the IMF’s headquarters ahead of next week’s meetings of the IMF and World Bank, Georgieva said the war had prompted the Fund to cut its global growth forecast, echoing a message she shared with Reuters on Monday.
“Had it not been for this shock, we would have been upgrading global growth,” Georgieva said, citing momentum from strong investments in technology and supportive financial conditions. “But now, even in our most hopeful scenario, it involves a downgrade of growth.”
U.S. President Donald Trump on Tuesday announced a two-week ceasefire with Iran, but Israel’s continued bombardment of Lebanon threatens to derail talks to forge a permanent peace.
Georgieva said the war posed significant but differentiated risks to IMF members, with net oil importers – 80% of countries – affected by rising prices and supply shortages, even as major oil exporters and non-oil economies in the region had been disproportionately hit.
“Even in a best case, there will be no neat and clean return to the status quo ante,” Georgieva said. Qatar’s Ras Laffan complex, which produces 93% of the Gulf’s LNG, for instance, had been shut since March 2 and could take three to five years to return to full capacity.
“The fact is, we don’t truly know what the future holds for transits through the Strait of Hormuz, or for that matter, for the recovery of regional air traffic,” she added, flanked by graphics showing the dramatic plunge in air and ship traffic over the last six weeks. “What we do know is that growth will be slower – even if the new peace is durable.”
The conflict, which began on February 28, would have ripple effects for some time, Georgieva said, including oil refinery shutdowns and refined product shortages that were disrupting transportation, tourism and trade.
Another 45 million people would face food insecurity, bringing the total number of people in hunger to over 360 million. Supply chain disruptions would also continue, given industrial dependencies on inputs such as sulphur, helium for chip-making and naphtha for plastics.
GROWTH FORECAST DOWNGRADED
The IMF will release a range of scenarios in its World Economic Outlook next week, going from a relatively swift normalization to a scenario that saw oil and gas prices remaining much higher for much longer, Georgieva said.
Even the most hopeful scenario, she said, involved a growth downgrade due to infrastructure damage, supply disruptions, losses of confidence and other scarring effects.
In January, the IMF had forecast global growth of 3.3% in 2026 and 3.2% in 2027. It was not immediately clear how much of a downgrade the IMF would announce next week. Georgieva told Reuters on Monday inflation forecasts would also be increased.
Next week’s meetings, which will bring together thousands of finance officials from all over the world, will focus on how to weather the shock of the war, and how the IMF can help countries in need, Georgieva said.
She said the IMF was well-resourced and could scale up balance of payments support through existing programs, and additional countries were expected to request aid. She did not identify any specific countries seeking help.
The expected surge in funding requests comes on top of $140 billion in active programs before the war, an IMF official said. Including credit outstanding and lending already in the pipeline, the IMF’s total commitments amount to $245 billion.
Between May 2024 and March 2025, the IMF approved over $36 billion in new lending, according to a study by Boston University.
Georgieva warned that the energy supply shock was already driving up short-run inflation expectations, although longer-run expectations had not budged.
Financial conditions had already tightened, but in an orderly manner, and some easing was now evident.
The broader impact would depend on whether the ceasefire held and resulted in a lasting peace, and how much damage the war left in its wake, Georgieva said.
COUNTRIES SHOULD NOT GO IT ALONE
Georgieva said a demand adjustment was unavoidable, but cautioned countries against adopting export controls, price controls and other measures that could further upset global conditions.
“I appeal to all countries to reject go-it-alone actions,” she said. “Don’t pour gasoline on the fire.”
Georgieva said there was value in watching and waiting, but central banks should “step in firmly with rate hikes” if inflation expectations threatened to break anchor and trigger an inflationary spiral. But she warned against premature moves that could throw “cold water on growth.”
She noted that many countries were putting in place conservation measures, including putting limits on private vehicle use and promoting remote work. Most countries had avoided untargeted tax cuts or energy subsidies, and the IMF was working actively with countries to ensure any measures remained temporary.
Adding deficit-funded stimulus now would increase the burden on monetary policy and amplify the rise in benchmark yield curves, further driving up the cost of debt.
Public debt was generally much higher than 20 years ago, Georgieva said, urging countries to move decisively to rebuild their financial buffers after this shock after years of failing to do so.
Even before the war, global public debt was projected to rise to about 100% of gross domestic product by 2029, its highest level since 1948.
(Reporting by Andrea Shalal; additional reporting by David Lawder; Editing by Kim Coghill and Andrea Ricci )
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