High-debt countries must consolidate public finances as inflation risks persist and central banks focus firmly on price stability, International Monetary Fund chief Georgieva said at annual meetings on Oct. 16.
The IMF kept its 2026 global growth forecast at 3.1%, unchanged from its projection a year earlier. Georgieva said an energy shock was weighing on growth while an artificial intelligence boom was supporting it.
Her address opened the IMF and World Bank annual meetings in Thailand and was carried in Reuters’ live program published Oct. 16. She said economic performance varied widely, with war-hit economies receiving large growth downgrades while the United States, China, India and other Asian economies in the AI supply chain received upgrades.
“The inescapable bottom line is that preserving stability requires fiscal consolidation in most high-debt countries,” Georgieva said. Governments needed credible medium-term fiscal plans backed by measures taken early, while protecting vulnerable people and limiting damage to future growth, she said.
The fund supported recent monetary tightening and firm policy language from the U.S. Federal Reserve, European Central Bank and Bank of Japan, Georgieva said. “Rate hikes today are better than falling behind the curve and having to double down with larger rate increases tomorrow.”
She said higher benchmark borrowing costs had spread across advanced and emerging economies after U.S., German and Japanese 10-year sovereign yields reached their highest levels since 2002, 2009 and 1996, respectively. Market conditions remained orderly, she said.
AI investment was lifting growth but also adding to near-term inflation through infrastructure needs increasingly financed by debt. Productivity gains were expected, but their scale and timing remained open.
Georgieva called for international cooperation on cyber risks as attacks increased and the time between discovering and exploiting vulnerabilities fell from months to hours. The IMF provides about 300 technical assistance and training programs in financial supervision each year, she said.
The fund also said the United States should save more, China should consume more and Europe should invest more. Near-term trends were moving in the opposite direction, with the United States still relying heavily on domestic demand and China on net exports, Georgieva said.
IMF outstanding credit and undrawn commitments totaled $240 billion, while unused lending capacity was three times that amount, she said. Concessional lending stood at $36 billion, about four times its historical average.
Funding for the Poverty Reduction and Growth Trust remained unresolved. Thirty-nine countries had provided assurances covering about 48% of the required support, while potential commitments from European Union countries would raise the share to 74%, short of the 90% goal.
The annual meetings also secured more than $100 million in new commitments for IMF capacity development, equal to about one-quarter of annual spending. Georgieva said the fund had completed reviews of its surveillance, lending conditions and debt sustainability methodology for low-income countries.
