IMF chief urges countries to do more to curb debt and regulate AI

IMF chief urges countries to curb debt and regulate AI

IMF Managing Director Kristalina Georgieva warned countries, both rich and poor, must take immediate action to reduce debt and address growing inequality as their economies face a "triple whammy" from the artificial intelligence boom, heavy borrowing, and geopolitical shocks from wars in the Middle East and Ukraine. Speaking ahead of an IMF-World Bank meeting in Bangkok, Georgieva emphasized the need for policymakers to use available tools now, rather than delaying necessary actions.

Georgieva highlighted risks associated with the rapid expansion of data center capacity to support AI, which has driven stock prices to record highs. She noted that investments in AI are expected to surpass spending on critical infrastructure like railroads, electricity grids, and telecommunications networks. While AI is a key driver of economic growth, its benefits arrive gradually, potentially leading to a mismatch between heavy investments and the arrival of AI-driven gains.

If earnings fall short of expectations, Georgieva warned, the excess leverage of tech giants and large global holdings of U.S. equities could exacerbate economic instability.