IMF warns AI boom is widening global divide

Low-income countries that rely on imported energy and remain outside the artificial intelligence (AI) value chain risk falling further behind as the technology boom increasingly supports global economic growth, the International Monetary Fund (IMF) has warned.

Speaking at the closing press briefing of the IMF-World Bank Annual Meetings in Bangkok yesterday, IMF Managing Director Kristalina Georgieva said discussions were marked by both optimism and concern.

“There is no room for complacency,” said Mohammed Aljadaan, chair of the International Monetary and Financial Committee (IMFC) and Saudi Arabia’s finance minister.

Georgieva said the AI boom was a major source of support for the global economy but warned that relying on a single growth driver could be risky.

“It’s like we stand on one leg,” she said, stressing the need for safeguards to protect people and businesses.

She cited Thailand, the host country for the meetings, as an example of how sound policies and strong institutions can expand opportunities, noting its integration into the global AI supply chain.

She named no South Asian country, but her description of energy-importing economies outside the AI value chain is one that many in the region will recognise.

She also warned that AI could widen economic disparities, particularly for low-income countries and fragile states.

The IMF’s concerns extend beyond technology to mounting debt-service costs, which are putting pressure on poorer economies even as their debt ratios show some improvement.

Georgieva said debt-to-GDP ratios were rising in rich countries but falling slightly in low-income ones. However, higher inflation and interest rates have pushed debt payments in low-income countries from 8 percent to 14 percent of government revenue in recent years.

Asked about calls for fiscal consolidation at a time when poorer countries face growing needs, she said the response should begin with sound domestic policies, fair revenue collection and spending that protects the most vulnerable while supporting economic growth.

She added that the IMF did not see a need for dramatic adjustment in many low-income countries, crediting them with putting debt on a downward path.

The IMF has also taken steps to expand financial support for poorer economies. Georgieva said recent decisions on the Poverty Reduction and Growth Trust, the fund’s concessional lending vehicle, would allow it to provide more than three times the concessional lending available before the reforms.

Meanwhile, ten partners -- France, Germany, Ireland, Italy, Japan, Kazakhstan, Luxembourg, the Netherlands, Spain and Switzerland -- committed more than $100 million for capacity development.

IMF members also reaffirmed their support for timelier, more predictable and coordinated debt restructuring, including through the G20 Common Framework.

On monetary policy, Georgieva urged central banks to remain “laser-focused” on price stability, warning that inflation remained stubborn and rising interest rates were adding to debt-service pressures.

“Inflation is like a tax on the poor,” she said.

Aljadaan said central bank independence was essential to maintaining price stability and policy credibility.

Georgieva also urged regulators to monitor risks stemming from rising leverage, non-bank financial institutions, cyberattacks and fraud.

She noted that Thai authorities had guided members towards the Bangkok Blueprint, a step towards developing a framework for digital finance.