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End of grain deal can lead to increase in grain prices by 10-15% — IMF

According to IMF’s Chief Economist Pierre-Olivier Gourinchas, about 33 million tons of grain were exported from Ukraine under the Black Sea initiative

WASHINGTON, July 25. /TASS/. The International Monetary Fund (IMF) believes that the completion of the Black Sea deal can lead to an increase in grain prices by 10-15%. IMF’s Chief Economist Pierre-Olivier Gourinchas said this at a press conference on Tuesday.

According to the information he provided, about 33 million tons of grain were exported from Ukraine under the Black Sea initiative.

"It helped keep price pressures on food and grain prices lower," he said.

According to the expert, "now that grain deal has been suspended, the same mechanics works in reverse and it is likely to put upward pressure on food prices."

"We have some estimates in terms of how much the supply is going to be withdrawn and what is he elasticity of price to the reduction in demand. We are still assessing where we are going to land, but we would be thinking that somewhere in the range of 10 to 15% increase in prices of grains is a reasonable estimate, although we’ll have to see exactly how his is going to unfold," the IMF Chief Economist said.

The grain deal, which provided for the safe export of Ukrainian grain across the Black Sea and created conditions for the export of agricultural products and fertilizers from Russia, was concluded on July 22, 2022 in Istanbul. Since then, it has been extended several times.

On July 17, Russia refused to continue participating in the initiative, since the other parties did not fulfill their obligations in that part of the agreement that concerned the supply of Russian products to the world market. Putin assured that Moscow could resume the grain deal if all the promises made to it were fully fulfilled.