IMF Chief Urges Urgent Fiscal Action As Global Economic Resilience Reaches Limits

ISTANBUL, Oct 14 (Bernama-Anadolu) -- IMF Managing Director Kristalina Georgieva on Wednesday urged governments to urgently strengthen public finances, warning that the global economy’s resilience to repeated shocks is reaching its limits, Anadolu Ajansi reported.

Speaking at a press briefing during the IMF-World Bank annual meetings in Bangkok, Georgieva said energy and fiscal buffers were being depleted, while persistent inflation and rising interest rates were adding to debt-servicing pressures.

Global growth is projected at about 3.1 per cent in 2026, unchanged from April’s forecast but below last year’s 3.4 per cent, she said.

The outlook reflects opposing forces, with the war in West Asia disrupting energy supplies while demand linked to artificial intelligence supports economic activity.

Economies integrated into AI supply chains, including Thailand, Malaysia, South Korea and Singapore, were generally performing better, along with energy exporters unaffected by wars.

Low-income countries and fragile states, particularly energy importers excluded from the technology boom, faced the greatest pressures.

Georgieva said government bond yields in advanced economies had risen to multidecade highs, reflecting inflation, investment demand, expectations of stronger AI-driven growth and fiscal weaknesses.

Higher benchmark yields were increasing borrowing costs for emerging markets even where their risk premiums remained stable, she said, warning that elevated financing costs were likely to persist.

Debt-servicing costs in low-income countries had increased from 6 per cent of government revenues a decade ago to 14 per cent, she added.

Georgieva urged governments to raise revenues, rationalise spending and improve public financial management. Assistance to offset rising food and energy costs should be temporary and targeted at vulnerable people while preserving price signals.

Central banks should remain focused on price stability, with the strongest case for tightening in economies where inflation exceeds targets and activity remains robust.

On global imbalances, she called on China to boost domestic consumption, the US to increase savings and reduce deficits, and Europe to strengthen investment.

US economic growth alone would not deliver the required fiscal adjustment quickly enough, making additional measures necessary, she said.

Georgieva also warned that disappointing near-term AI returns could trigger a disorderly market correction, while AI-enabled cyberattacks posed risks to financial stability.

-- BERNAMA-ANADOLU