The International Monetary Fund (IMF) says governments must take further steps to reduce budget deficits and control global debt, which is currently at historically high levels.
IMF Managing Director Kristalina Georgieva said Sunday at the Qatar Economic Forum in New York: “We have consistently warned about the need for fiscal consolidation. We see a lot of understanding, but action has not yet been sufficient.”
The IMF forecasts that global public debt will exceed 100% of GDP by 2029—two years earlier than previously expected—driven largely by rising debt in the United States and China.
“We have repeatedly urged the U.S. to pay attention to its fiscal situation,” she said. “Through discussions with Treasury Secretary Scott Bentsen, we reached consensus that this situation is unsustainable, and the U.S. must gradually reduce its deficit and debt.”
The IMF chief has repeatedly warned about the risks posed by rising debt levels and urged member countries to act. Last month, she stated that most advanced economies—including the United States—face debt challenges requiring “policy attention.”
Georgieva noted that inflation remains “stubborn,” and central banks around the world may need to follow the Federal Reserve and the European Central Bank in raising interest rates. She pointed out that higher borrowing costs will make debt servicing more difficult.
She added that the global economy has so far shown resilience amid persistent inflation and trade tensions, partly due to a surge in investments in artificial intelligence. However, she emphasized that uncertainty remains high, as evidenced by rising bond yields and lack of progress in curbing inflation.
Georgieva also said the energy shock caused by the Iran war has not ended. “In short, we are now facing a tug-of-war between negative supply shocks from the Middle East and positive demand shocks from artificial intelligence.”
Currently, monetary policy in emerging markets is on par with or even better than that of developed economies, while debt levels in advanced economies have risen sharply.
