The International Monetary Fund has warned that rising public debt, inflationary pressures and geopolitical tensions threaten global economic stability.

IMF managing director Kristalina Georgieva gave the warning during the 2026 World Bank/IMF Annual Meetings Plenary on Friday in Bangkok, Thailand.

Ms Georgieva said that the global economy remained resilient, with growth projected at 3.1 per cent in 2026, unchanged from the IMF’s forecast a year earlier. She attributed the resilience to opposing forces, including energy supply disruptions weighing on growth and the AI boom supporting economic activity.

Ms Georgieva said that economic performance varied significantly, with war-affected economies facing weaker growth prospects while countries linked to the AI value chain recorded improvements. She identified rising debt, energy supply shocks, geopolitical tensions and rapid technological changes as major challenges confronting policymakers.

She said that high debt levels were reducing governments’ capacity to respond to economic shocks, while rising interest payments were crowding out development spending in low-income countries. According to her, energy supply disruptions are pushing inflation upward while weakening growth, with shipping risks and shortages of refined petroleum products and natural gas worsening the situation.

Ms Georgieva also said the rapid expansion of AI was increasing infrastructure investment needs, potentially adding to debt and short-term inflationary pressures.

“Productivity gains from AI are expected, although their scale and speed remain uncertain. Central banks will have to prioritise price stability, supporting recent monetary tightening by the United States Federal Reserve, European Central Bank and Bank of Japan. Timely interest rate increases are preferable to delayed action that could require more aggressive tightening later,” she said.

She said that monetary tightening could raise government borrowing costs, making credible fiscal consolidation essential for highly indebted economies.

Ms Georgieva urged governments to develop medium-term fiscal plans, implement credible measures, protect vulnerable citizens and pursue structural reforms to strengthen economic growth. She also called for greater preparedness for AI, warning that its risks included youth unemployment, erosion of tax revenues, financial instability and escalating cybersecurity threats.

“Stronger international cooperation is needed to improve cyber resilience, as weaknesses in one country’s digital systems could expose others to risks. The IMF continues to support member countries through financial assistance, surveillance, technical assistance and training to strengthen economic and financial systems.

“The Fund’s outstanding credit and undrawn commitments stand at $240 billion, while concessional lending have reached 36 billion dollars,” she said.

Ms Georgieva described the concessional lending figure as approximately four times its historical average. She called on member countries to provide additional funding for the Poverty Reduction and Growth Trust, which supports the Fund’s poorest and most vulnerable members.

She said 39 countries had provided assurances representing about 48 per cent of the required support, while efforts were ongoing to raise the figure to 90 per cent.

Ms Georgieva also said that the IMF secured more than $100 million in new commitments for capacity development during the annual meetings. She urged countries to address global economic imbalances, arguing that the United States needs to save more, China to consume more, and Europe to invest more.

She said that coordinated international action remained essential to managing economic risks and ensuring that technological advances and economic progress benefited people across the world.  

(NAN)