IMF chief warns of soaring debt and calls for swift fiscal and monetary action

At a briefing in Singapore, IMF Managing Director Kristalina Georgieva warned that global debt-to-GDP ratios have risen to their highest point since the second world war and could approach 100 percent in the near future. She argued that governments cannot depend on rapid growth to reduce debt burdens and must enact “very tough political choices,” urging advanced economies to present credible medium-term fiscal consolidation strategies, sometimes supported by upfront measures.

Georgieva noted that recent spikes in bond yields have pushed borrowing costs to multi-decade highs, exacerbating budget pressures amid competing priorities such as defence spending. She recommended that central banks maintain a cautiously hawkish bias, citing recent rate hikes by the ECB, the US Federal Reserve and the Bank of Japan as appropriate, while the Bank of England remains on hold. The IMF chief also flagged the dual challenge of AI, praising its growth potential but warning of large-scale labour disruptions, cyber threats and the danger of uncontrolled frontier models. She called on policymakers to address these AI risks while leveraging its economic benefits.