By Asad Hashim and Julien Girault / AFP, BANGKOK
IMF managing director Kristalina Georgieva yesterday said that this year’s Annual Meetings with global policymakers were marked by “optimism and worry” about the global economic outlook as the event wound down in Bangkok.
Georgieva also said her organization had a “responsibility” to help low-income countries struggling with price shocks stemming from the US-Israel war on Iran.
Meetings in the Thai capital this week brought together finance ministers, central bank chiefs and other top officials from around the world, with surging inflation, spiking bond yields and economic growth driven by artificial intelligence (AI) at the top of the agenda.
Saudi Arabian Minister of Finance Mohammed al-Jadaan, left, and IMF managing director Kristalina Georgieva attend a news conference in Bangkok yesterday.
Photo: EPA
The meetings “were marked by both optimism and worry,” said Georgieva, who was speaking at a press briefing alongside Saudi Arabian Minister of Finance Mohammed al-Jadaan.
“Optimism from the resilience of the global economy, the promise of AI, the dynamism of Asia. But AI is also recognized to be a source of worry, and so are inflation, high levels of debt, wars, climate risks,” she said.
All week, the IMF has warned that high levels of debt and rising bond yields in advanced economies are tightening financial conditions just as central banks need to focus on bringing inflation down, likely by increasing interest rates.
Global energy prices have spiked since late February, when the US and Israel launched the war on Iran, with Tehran’s retaliatory actions targeting Washington’s Gulf allies and curtailing oil and gas supplies.
The price increases have rippled across the globe, fueling inflation in economies across a range of income groups.
The most vulnerable to the shock, the IMF has said, are low-income oil-importing countries that are not exposed to the boom in AI investment that has propped up growth in many advanced economies.
“I can tell you that people everywhere, but especially in poorer countries, they don’t like inflation. Inflation is like a tax on the poor,” Georgieva said.
Such countries needed to set spending targets such that they prioritized growth and protecting the most vulnerable people, she said, adding that the IMF had a “relentless pursuit of more resources for low-income countries.”
However, higher global interest rates and bond yields are driving up debt repayments for low-income countries, she said.
The share of debt repayments as a percentage of government revenue had gone up to 14 percent from 8 percent for low-income countries in the past few years, she said.
Her organization had a responsibility to help countries to restructure debt if needed, to assist with domestic resource mobilization, to bring in international finance and to create conditions for private investment, she said.
“When we do our best, it translates into better lives for people,” Georgieva said.
On the AI investment boom, she said that member countries had recognized its value in propping up growth, but “when we are dependent on one particular driver of growth, it is like we stand on one leg.”
A key debate at this year’s meetings has been on whether the technology’s most advanced frontier models require regulation and guardrails.
The question has grown more urgent after recent revelations of security incidents involving autonomous AI agents.
Georgieva said she was “impressed” by the spirit of cooperation between AI companies, governments and other stakeholders that she witnessed in Bangkok on the issue.