IMF Commits to Engaging Member-Countries to Tackle Global Imbalances
* Says public debt at about 100% of GDP worldwide set to climb further *Raises concerns over surge in global interest rates *Urges central banks to focus on price stability
The International Monetary Fund (IMF) is committed to working with its member countries to tackle global imbalances, according to Kristalina Georgieva, the IMF Managing Director. She made this statement at the conclusion of the G20 Finance Ministers and Central Bank Governors’ Meeting in the United States of America. Georgieva expressed concern that public debt - currently at nearly 100% of global GDP - has exceeded its post-World War II levels and is expected to rise further.
Georgieva noted that while global growth for 2026 is expected to be around 3%, the benefits are not evenly distributed. She highlighted three key issues: the ongoing energy shock, rising public debt, and the stalled disinflation process. The ongoing energy crisis, with the Strait of Hormuz largely closed and AI driving up energy demand, remains a concern.
Additionally, she pointed out that public debt, already at near post-war highs, is set to increase, suggesting a near-staircase pattern rather than a reduction afterward. This trend is exacerbated by mounting fiscal pressures pushing core bond yields upwards.
The disinflation process has also stalled in many countries, causing unease among markets due to the complex interplay between fiscal and monetary policies. Despite these challenges, Georgieva emphasized that central banks should prioritize their mandate of price stability, while fiscal authorities need to develop credible medium-term consolidation plans. Structural policies are also crucial, focusing on reducing bureaucratic barriers to growth.
Turning to debt challenges, particularly in developing countries, Georgieva noted that while progress has been made in recent years, it is uneven. Persistent risks and global economic uncertainties, including yield increases in advanced economies, require better policy discipline. Furthermore, she highlighted the growing concern over rising global interest rates, which are pushing most yield curves higher.
This trend is particularly problematic for developing economies, as it raises refinancing needs and debt-service costs.
Georgieva emphasized the need for a collective effort to address these challenges in three areas. First, immediate action is required in countries with unsustainable debt levels, supported by improved restructuring processes.
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