The heads of the International Energy Agency, the International Monetary Fund and the World Bank Group have agreed to form a joint coordination group.

The group aims to strengthen its response to the energy and economic shocks triggered by the ongoing war in the Middle East. The institutions disclosed this in a joint statement issued on Wednesday. 

The statement said the conflict had caused significant disruptions to livelihoods across the region and led to one of the largest supply shortages in the history of global energy markets.

It said that the impact of the crisis was “substantial, global, and highly asymmetric”, with energy-importing nations, particularly low-income countries, bearing the brunt.

According to the statement, the effects are already evident in rising prices of oil, gas, and fertilisers, with growing concerns about food inflation.

It said that global supply chains had also been affected, including commodities such as helium, phosphate, and aluminium, as well as tourism due to flight disruptions at major Gulf transport hubs.

It said the resulting market volatility, weakening of currencies in emerging economies, and concerns about inflation expectations raised the prospect of tighter monetary stances and weaker growth.

“At these times of high uncertainty, it is paramount that our institutions join forces to monitor developments, align analysis, and coordinate support to policymakers to navigate this crisis.

“This is especially the case for countries that are most exposed to the downstream impacts from the war and those confronting more limited policy space and higher levels of debt,” it said.

The statement said the coordination group would assess the severity of the crisis across regions.

It said it would do so through coordinated data sharing on energy markets and prices, trade flows, fiscal and balance-of-payments pressures, inflation trends, export restrictions on key commodities, and supply chain disruptions.

“The group  will  coordinate a response mechanism that may include: targeted policy advice, assessment of potential financing needs and related provision of financial support (including through concessional financing). It may also include use of risk mitigation tools as appropriate,” it said

The statement said the group would mobilise other multilateral, regional, and bilateral partners to ensure efficient, coordinated assistance to countries in need.

It said that the group would work with and draw on other international organisations’ expertise as needed.

“We are committed to working together to safeguard global economic and financial stability, strengthen energy security, and support affected countries and people on their path to sustained recovery, growth, and job creation through reforms.”

(NAN)