The head of the International Monetary Fund (IMF), Kristalina Georgieva stated that governments need to subsidise the cost of food and energy for the poorest members of society.
The IMF boss said support needs to be provided “in a very targeted manner, preferably by providing subsidies directly to people”.
When it comes to the cost of living crisis, Ms Georgieva said: “There are two priorities, one the very poor people, segments of society that are now struggling with high food and energy prices”.
The second, she added, is to support those businesses that have been “most damaged” by the war in Ukraine.
The IMF’s role is to work with governments to stabilise the global economy and enhance prosperity.
However, that’s proving challenging because food prices have hit record highs this year, whilst oil and gas prices have also risen sharply.
The importance of these commodities to the global economy has led the annualised inflation rate to reach its highest point in decades in many countries: 9% in the UK, 8.3% in the US and 7.4% in the Eurozone.
Central banks are increasing interest rates to try and slow the increase in prices, which has led some influential figures such as Goldman Sachs’ Lloyd Blankfein to warn of the risk of recession.
Ms Georgieva is also concerned about the impact those higher borrowing costs will have on governments who have to repay huge debts they took on to get through the pandemic.
Over the last few months governments have made a range of interventions to try and lower the cost of living.
“If we are to learn any lessons from 2019 if is to be much more humble about policy decisions, and engage in multiple ways with people, because policies must be for people, not the paper we write them on,” she said.