Targeted support, not subsidies, can best protect people when inflation surges – IMF

The International Monetary Fund (IMF) said targeted, temporary income support is the most effective and cost-efficient way for governments to protect vulnerable households during cost-of-living crises.

Subsidies carry higher fiscal costs The IMF said governments often responded to cost-of-living pressures with broad-based measures to suppress price increases, including tax reductions, producer subsidies, lower customs duties, and price controls.“Assistance, when warranted, should be temporary and delivered through targeted income-support measures, ideally using existing social protection systems that can be scaled up quickly,” it said.