Low-income countries are spending up to 14 per cent of their revenue on debt repayments as wars, inflation and higher borrowing costs put pressure on vulnerable economies, IMF managing director Kristalina Georgieva has warned.
Speaking after the IMF’s annual meetings in Bangkok, Georgieva said poorer nations were also being left out of the investment boom linked to artificial intelligence, which is helping to drive growth in richer countries.
She said discussions with policymakers had revealed a mixture of “optimism and worry”, pointing to the resilience of the global economy and the dynamism of Asia alongside concerns over inflation, debt, wars, climate risks and AI.
Higher global interest rates have pushed debt-servicing costs for low-income countries to between 8 and 14 per cent of government revenue, Georgieva said.
“I can tell you that people everywhere, but especially in poorer countries, don’t like inflation. Inflation is like a tax on the poor,” she said.
Debt pressure and energy costs
The warning came as low-income, oil-importing countries face the sharpest impact from rising energy costs. Prices have increased since February, when the United States and Israel launched a war on Iran, triggering retaliatory strikes in the Middle East and disrupting oil and gas flows.
Saudi Finance Minister Mohammed Al-Jadaan, chairman of the International Monetary and Financial Committee, said escalating conflicts and trade tensions could further disrupt important trade routes and increase pressure on commodity prices, including refined energy products.
He said the developments could also worsen energy and food security. The committee is the main steering body of the 191-member IMF.
Georgieva said the IMF had a responsibility to help countries restructure their debts where necessary, strengthen domestic revenue collection, attract international finance and create conditions for private investment.
She said governments should set spending priorities that support growth while protecting the most vulnerable, adding that the fund was engaged in a “relentless pursuit of more resources for low-income countries”.
“When we do our best, it translates into better lives for people,” Georgieva said.
The IMF chief also said the organisation planned to support Iraq “very firmly” through a requested loan programme. Talks with Lebanese authorities had made significant progress, she said, although further work was still required.
