IMF Regional Economic Outlook (REO) “Rising Food Prices and Vulnerable Households: Fiscal Policy Options”

The sharp1 run-up in food prices between 2006 and mid-2008 has set off a debate about how to deal with the adverse effects on low-income households, which typically devote a larger share of their budget to food. In response, policymakers across the region have adopted a variety of measures to try to mitigate the impact of rising food prices on the poor. These steps have ranged from administrative measures (e.g., price controls, export quotas) to tax and expenditure measures (e.g., lowering indirect tax rates, expanding social safety nets). These actions entail varying degrees of fiscal and efficiency costs and effectiveness in reaching those households most exposed to food price hikes.