IMF urges deficit cuts as borrowing costs climb

IMF head Kristalina Georgieva urged wealthy nations to address mounting global debt levels that heavily burden low-income countries and strain the financial system. While US leaders acknowledge the federal deficit and national debt are too high, economic growth alone is insufficient to tackle the $40 trillion national debt, she said.

Rising bond yields, driven by higher premiums for greater risk, have disrupted financial markets. IMF economist Rodrigo Valdes noted that fiscal consolidation efforts have been hindered by pandemic-related spending, and many countries lack proper reactions. In poorer nations, interest payments now consume a historic share of revenue, leaving little room for supporting vulnerable populations and meeting debt obligations.

The Global South is paying the price for higher interest rates in wealthier countries, UK Foreign Secretary Ed Miliband said. Developing countries pay three times more in interest compared to developed nations, with nearly 10% of government spending allocated to debt repayments. High fuel, fertilizer prices, El Nino effects, and climbing borrowing costs have left low-income countries with limited recovery options.

The IMF, Bank of Thailand, and World Bank launched a Bangkok Blueprint to combat cybercrime, financial fraud, and online scams, following recent cyberattacks causing refrigeration systems to malfunction in France.