parents to make them proud and show them what we can do. ♪ host: this is al jazeera and these are your top stories. inflation threatens to become a runaway train, that is the winning from the head of the international monetary fund as the global economy is hit by one truck after another. the head of imf says the risk of global recession is at 25%. >> we cannot possibly allow inflation to become a runaway train. bad for growth and bad for

people, that especially for poor people. host: the imf has chastised the u.k. government after its financial plans triggered chaos in the markets. the budget revealed last month has sent the value of british pound to all-time lows. more than 500 people have died in nigeria's worst flood in decades. you can usually heavy rains led to the destruction of tens of thousands of homes. the u.n.'s yemen envoy is calling on parties to renew their cease-fire. he blamed rebels for failure to extend the truce. there is been a decrease in violence before the april cease-fire deal last earlier this month. >> voters have a choice before them. they can take the path toward these -- peace as it expected from them by the yemeni population. a return to war would mean

renewed and increasing suffering or the population. host: iraq's parliament as elected a new president. the appointment of the 78-year-old kurdish politician ends months of political deadlock and heightened instability. during -- a jury in the u.s. state of florida as recommended life without the possibly of parole for the parkland high school shooter. he admitted to killing 18 students and three staff. it is the deadliest u.s. mass shooting to reach a jury trial in the u.s.. vigorous house select committee investigating the storming of capitol hill as it boded to subpoena former u.s. president donald trump to testify. trump has never been forced to give evidence before congress not even during his 2 impeachment trials. inside story coming up next. ♪

host: the worst is yet to come, that is the warning from the international monetary fund as it paints a grim picture of the global economy, but what is behind this spiraling crisis, and what should be done to stop it? this is inside story. ♪ hello and welcome to the program. i am tom mccrae. the international monetary fund and world bank are holding their meetings and washington d.c. to discuss a number of global issues, the war in ukraine,

persistent supply chain descriptions and a looming recession are topping the agenda to name a few. the imf says that the world economy is heading for what it calls stormy waters as many risk factors regulate. it downloaded -- ground -- downgraded global growth projections and warned of a harsh recession if the fight against inflation is mishandled. >> 1/3 of the global economy is expected to contract this year or next. the three largest economies, the u.s., china and the euro area will continue to stall. the worst is yet to come, and for many people 2023 will feel like a recession. host: the question remains, who will pick up the pieces? lebanon's economic collapse is accelerating in the absence of a government recovery plan. the international community as made clear the only way out of the crisis is through a deal

with the imf we will get to our guest moment. first this report from beirut. correspondent: lebanon's economic crisis is headed into its fourth year. the state is nearly bankrupt. it cannot buy fuel for electricity. infrastructure is falling apart. while institutions struggle to afford basic operating costs. there is a desperate need for hard currency. the international community made clear any funding will only come from the international monetary fund. that means performing it dysfunctional system blamed on decades of mismanagement and corruption, but there has not been political will. >> the ruling elite does not want these reforms, because it will undermine the structure of

their power that has been going on for 30 years now. correspondent: the country's leaders have refused to open the books of the central bank. they failed to pass laws, to investigate financial crimes and stop billions of dollars from being transferred abroad. instead the shared interest of the political and financial elite have led to bank customers suffering losses and being denied access to their savings. any financial program between the imf and lebanon would involve passing structural reforms and anticorruption measures to improve governance. that is unlikely to hurt the interest of politicians accused of using the state of the interest of themselves and their associates. this was once a middle income country, but the local currency has lost value, and its financial losses are estimated to amount to $72 billion, 4

times the size of the economy. official state they remain committed to the path laid up with the imf but there is no consensus on the recovery plan. >> reforms cannot go on with normal circumstances and lebanon. we need stability. correspondent: one of the world's worst meltdowns deepens by the day. ♪ host: let's bring in our guests, in brussels we have daniel, director of the center for european policy studies. new delhi, an economist and a member of the u.k. house of lords, and in nairobi, a financial advisor and ceo of rich management. welcome to you all, thank you for being on this edition of inside story. daniel, if i can start with you,

you used to work at the. how solid or reliable are these forecasts? >> the imf is extremely careful, it collects information from all of its member countries. i think these forecasts are as reliable as you can do them right now. there is also great uncertainty. it might be better but lots of uncertainty below, so it might get worse. economics is not a physical science, there was always uncertainty. host: do you agree with the imf's grim outlook that the global economy is headed for stormy waters, and how bad things can get? >> i think i not only agree with the imf downgrading the growth rate, i think it is going to be

much more serious than even the imf realizes. we areeeing a repetition of what we saw in the 1970's. we have an energy price increase which is preceded by the inflationary increase in money, and now we are in a war situation because of the russia-ukraine or -- war, and i think we are facing a long cycle of stagflation. there is nothing normal central banking policy can do to avoid stagflation. all they can do is curtail demand, that is not the answer. we will be in a very tough time. host: so, the global economy just as to ride it out? >> that is right.

host: the imf chief said of all regions, africa is in the most precarious position with a massive food crisis there. what specifically can the imf do to alleviate the problems in africa? >> will -- well, i think the african situation is been coming at us for quite a while. africa over borrowed during the good times, when we were in that moment that lasted a decade of disneyland economics where money was cheap, and now we have a situation where the cost of servicing this debt as reason inexorably high. clearly, an unsustainable position. africa will rely very heavily on

the likes of imf and world bank, but it will take a lot of money to rebalance the situation. just to go back to what your earlier speakers were saying, what we have now is a very strong dollar. it is highly likely the euro goes back to record lows, dollar-yet goes back to 160 and this will put pressure on emerging market economies. these economies are going to be looking for debt restructuring and rescheduling, but because of the nature of this crisis, which is a public crisis -- poly crisis, it is first come first serve. zambia first out of the gate, he will resolve the matter but others are going to be left in the dust year. -- dust here. host: which countries are you

talking about specifically? >> it about countries like nigeria, which just simply the political class really have not got a handle on things. this is a problem we are seeing in many areas around the world. these people are not competent, and in africa we have got plenty of policymakers i think are not on top of the situation. zambia is a positive example. egypt has a lot of support from international institutions and deep pocketed golf allies. if you look at ethiopia, fighting a civil war with $1 billion of reserves, it is broke. they are continuing this existential battle, and there are so many cases like that across the continent. you started russia with lebanon. let me say this, it strikes me

europe is not much different to lebanon. it had leverage from russia in terms of its gas supplies, and billion dollars of gas from russia supported a $2 trillion euro economy. by december what we are seeing in lebanon will be replicated in many capitals around europe. it is a very big problem, i do not think the majority of policymakers have truly understood the scale of the issue. host: daniel, i see you smiling. is that something you would agree with? what happens in lebanon happening in other european countries? >> it is true that europe must pay a price, and a heavy price for its overreliance on russian gas. europe is a little bit better governed than lebanon.

we have constant squabbles among member states but we usually agree on a common line. many european countries have saved a lot of cash, the price for consumers has increased. further gas savings will be forthcoming, and i am quite confident that europe will be able to pull through this winter. not easily there will be problems, but we all know these are temporary problems and europe has a very strong industrial base. our exporters have been able to increase the price, so there is some offset to high gas prices, and overall europe will come through it with the recession in between, but in one year from now i think the recession should be behind us in europe. host: can we talk a little bit about the real people, if i can put it that way, the people on the street. we are seeing everyone around the world paying more for power,

food, more on their mortgages. everything is getting more expensive, and there are plenty of people wondering this -- watching this wondering how much worse it is going to get? when will there be relief? will it be in one year's time. >> the thing is we cannot take a short-term perspective on this problem. this problem will not go away anytime soon. europe will be slightly better off than eastern countries or african countries but everyone only countries which areuation. producers of energy and can deliver energy to people who are in demanding position, they are the only ones who arehe only ones were going to save themselves. the rest of the world is going to suffer severe stagflation,

and all this it what banksill do is make the receson worse. that is what the federal reserve is doing by making the dollar strong. it will ruin the situation in the u.s. and everywhere else. they have not found a way of fighting inflation, and that is where the problem lies. host: ok, aly-khan you mentioned a little while ago i debt and 60% of low income countries are in distress according to the imf. many poor countries will face economic disruption and potentially default on that debt. how big a risk is that, do you think? >> it is entirely likely to happen. the imf is looking at the following metric, they are looking at that versus gdp -- debt versus gdp.

the number you are looking at is that service versus revenues, and in so many countries the debt service number is now higher than the total government revenue number, so basically these balance sheets are shot to bits, and unless there is enormous debt forgiveness, it is an unsustainable situation. the freight train, we can see the lights, we are in the tunnel and it is coming at a tremendous speed, and there is no way of sidestepping it unless the likes of the imf, the big creditors go through a massive round of debt forgiveness and look at restructuring these balance sheets like they did under nicholas brady where latin america over borrowed all of those years ago. your previous speaker was speaking about energy. it is not just energy. you cannot print energy and food. and those countries that have

energy and food and ironically it is russia and the u.s., the strongest economies in the current scenario, you cannot print those things. and this is the european challenge amongst other countries. i do not see cost-of-living leave coming anytime soon. we have a mickey mouse financial policy. who is able to bring inflation down when interest rates in the u.s. are 8.2%. you have to get interest rates much higher, and that is the only way you are going to bring inflation down and the cost of living. until we have that happened the cost-of-living increase and it puts undue pressure at the bottom -- bottom of the pyramid. host: the imf chief said

politicians have to avoid policy missteps and act urgently, but what exactly do you want to see those in power do, and how fast or they need to act? so we do not see anymore mickey mouse? >> it depends on what country in the world you were talking about. the united states is already sitting pretty, it is enough oil and gas to keep its own economy afloat. it will just keep inflation down, and that will require a strong dollar for a time. in europe, what we have to do is combine does good things. we have to give people incentives to save on gas and energy in general, that means high prices but we have to help our poorer ones to support themselves and be able to pay those prices. that is being done right now in

germany where people get a certain base amount of energy for free and for the rest they have to pay the market price so they have incentive to save. africa is a very different story, but again, in africa, nigeria is a country which is a big exporter of energy, natural, -- petrol, crude oil and oil prices are very high. why is nigeria not doing well right now. these are internal governance problems and these you to be addressed in africa, of course along with fiscal policy, but one without the other will not work. host: obviously the war in ukraine is exacerbating all of these issues. the imf laid out all of the challenges but it basically said inflation is the top priority. aly-khan, do you think

inflation can be tamed while the war in ukraine is still going on? >> i think particularly for europe, german inflation for example as hit -- has hit a 40 year high. until that situation resolved itself and the supply of not only gas, oil, europeans went to sentient russian oil or put a price cap on it, it is a boomerang effect. it defeats me out european policymakers pursue this sanction policy, which is boomeranging and hitting their economy three or 4 times as hard as it is hitting the intended adversary. until that relaxes inflation will not relax in europe in particular, and globally as well . but what we really have, the biggest problem here, short-term interest rates, i have never

seen a lack between policy rates and inflation rates that we currently have. the germans, for example, at a bank -- ahd a bank and the interest rates at this time it would be at 12%, and essentially it would break the back of the inflationary problem, but we live in a time of fantasy economics where people think they can print all kinds of commodities, which they cannot. host: is there any country we can let you know that is doing a good job. we can go that is a way to handle this crisis? >> you might look for example at the northern countries, which have been very careful with their energy supplies. they have insulated their homes, they are actually doing quite well. switzerland is another country which is noted for its tight fiscal and monetary policy, but

in switzerland you have seen price increases. you cannot avoid all of the price increases, and the other thing is if you have strong domestic governance then you can minimize the effect. let me add one thing. it is not necessary for the accreted work to finish for inflation to come down in europe. it is essential energy prices stabilize at the highest level and inflation on its own will come down because there will be no further increases in energy prices, and that would be enough for europe to see inflation coming down to acceptable levels and monetary yields. europe can pull through even if the world continues for a long time. host: do you think that the poor are going to be unduly hit through this crisis? inequality is just going to grow even further from here? >> that has been one of the trends we have seen over the

last 12 to 18 months, significant increases in inequality, or people being put into poverty, and i'm afraid that trend is amplifying as the global economy softens. of course, if you take somewhere like africa, the african individual is spending up to 40% of their income on food, and therefore increases in food prices have a much more severe effect on the income and spending power of those people. i do not want to be a terrible pessimist, but i am really concerned, and i think that is why this social safety net idea really has to be rolled out for the most needy people across the globe, and i think this is the moment when you have to put those sorts of programs and safety nets into place. host: daniel, is there a silver lining here? we talked about the train coming

toward us in the tunnel with the lights on. is there any light at the end of the tunnel? >> i think the current trends in energy markets are reassuring. price is almost halved over the last 2 months. oil prices are coming down although opec plus has decided to reduce its production. i think we might be heading into a winter where will prices moderate even though the war continues, and that will take up some pressure on inflation. it might also allow the federal reserve to soften that and for the dollar to return to a more manageable level for many emerging markets. that is the good scenario. host: that is at least something. just before we go, i would like to ask you about this question? do you think that the imf is

still relevant in this day and age the crisis this large? >> absolutely, i think it is more relevant than ever. the question becomes is it being effective? the need for an organization like the imf this moment in time is massive. everybody needs the imf as far as i can see, but the question is have they got sufficient resources to apply at this moment in time, and are they applying those resources effectively? but definitely, the institution is required as is the world bank. this is the very time that these institutions are needed, at the moment we find ourselves in. host: daniel, the same question to you. does the imf have sufficient resources to do with this? >> it is true if the imf did not exist today we would have to invented. i think it has enough resources. of course, countries that need

financing, typically poor countries whose financial needs are not that large compared to the resources of industrial countries and therefore the imf. it is not a question of resources, it is a question of what the imf can do at this point? if in these countries the government stay as corrupt as they have in the past, because that is what brought these countries to the point they are in now. host: we will have to leave it there now, thank you both so very much, daniel gros in brussels and aly-khan. thank you very much for being on the program. thank you for watching. you can see the program again any time by visiting our website al jazeera.com, and for further discussion go to our facebook page. you can also join the conversation on twitter. our handle is @ajinsidestory.

for me and the entire team, goodbye for now.pgdki úç