In a statement made by Fitch, it was stated that governments have implemented various measures to mitigate the impact of rising prices since half of last year, and it is anticipated that such policies will continue to be implemented due to the repercussions of current geopolitical tensions in commodity markets.
While it was emphasized that many countries could absorb the impact of these temporary supportive measures on public finances, it was stated that some countries might have difficulties in withdrawing their inflation-fighting policies from implementation in the future.
It was noted that this situation may put pressure on country credit profiles.
It was reminded that 66 out of 120 countries rated by the rating agency implemented supportive policies such as incentives, tax cuts and price control, which aim to alleviate the impact of inflation, in addition to the monetary policy toolkit, from the middle of last year to the middle of this year.
“If provisional policies become established, they may have a more significant impact on public finances. This risk is significant as global commodity prices may remain high for longer than we expect. The Russia-Ukraine conflict has increased the upward pressure on energy prices, especially in Europe.
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