IMF cautions countries against broad fuel subsidies

The war in the Middle East has intensified strains on an already fragile global fiscal situation, with higher interest rates and rising energy prices already fuelling calls for support from emerging markets and developing economies, the International Monetary Fund said on Wednesday in its Fiscal Monitor report. Rodrigo Valdes, the IMF’s new fiscal affairs chief, said countries should skip fuel subsidies to help their citizens deal with a shortage of oil and the corresponding surge in energy prices and opt instead for targeted, temporary cash transfers that do not obscure higher prices and keep demand high. “We don’t have oil. We don’t have energy. Energy needs to be more expensive for everybody, so that the adjustment happens and we consume less,” Valdes told Reuters in an interview.