- IMF Managing Director Kristalina Georgieva has warned that rising borrowing costs and shrinking external financing are putting pressure on developing economies, particularly low-income countries, which limits their ability to fund critical infrastructure, health, and education.
- Global public debt has reached almost 100% of GDP, exceeding post-World War II highs and is expected to rise further, according to Georgieva.
- Georgieva stated that the energy shock is not over, with the Strait of Hormuz remaining largely closed and the need to replenish strategic oil and gas reserves.
- High refinancing needs and debt-servicing costs are constraining many developing economies, undermining growth and debt sustainability.
- Georgieva emphasized that collective action is required to address the debt and financing challenges facing developing countries.
- Global growth outlook for 2026 has firmed at around 3% since April, as the global economy absorbed the energy supply shock better than expected.
- Investment in artificial intelligence is driving growth, particularly in the United States, as it supports rising energy demand.
- Disinflation has stalled in many countries, while fiscal pressures are pushing core bond yields higher, raising concerns in financial markets.
IMF Managing Director Kristalina Georgieva raised alarms about the rising borrowing costs and diminishing external financing that are increasingly burdening developing economies, especially low-income nations.1
She noted that global public debt has reached nearly 100% of GDP, surpassing post-World War II levels and projected to increase further.2
"High refinancing needs and debt-servicing costs are limiting spending on infrastructure, healthcare, and education," Georgieva stated, warning that these pressures could undermine economic growth and public debt sustainability.4
The IMF chief highlighted that the sovereign debt situation in emerging economies has improved due to domestic policy efforts and international cooperation, but progress remains uneven.
Georgieva emphasized the need for collective action in three areas: addressing unsustainable debt, implementing the IMF-World Bank Three-Pillar Approach, and securing support from bilateral creditors.5
She pointed out that cuts to official development assistance and reduced financing from non-Paris Club creditors have exacerbated the challenges faced by these nations.
Despite a strengthened global growth outlook of about 3% for 2026, risks remain high, particularly due to ongoing energy shocks and inflationary pressures.36
"The energy shock is not over," Georgieva warned, citing the largely closed Strait of Hormuz and the need to replenish strategic oil reserves as critical concerns.
The IMF's latest report indicated that excess global imbalances widened by 0.7% of GDP in 2025, the largest increase in a decade, necessitating policy action in both surplus and deficit economies.
“Georgieva, speaking after the G20 meeting in Asheville, said the Strait of Hormuz remains largely closed and disinflation has stalled in many countries. She urged central banks to focus on price stability and fiscal authorities to adopt credible medium-term consolidation plans.”
realnewsmagazine.net
Ahram Online
