Last week's meetings of the IMF and World Bank gave developing countries no new answers on the Middle East war, Ukraine, rising debt payments or a potential AI bubble. The lenders offered their usual advice to shrink fiscal deficits and accelerate reforms.
Developing countries left the IMF and World Bank meetings with the same advice as before: shrink fiscal deficits and speed up economic reforms to attract more private sector investment. Reuters reported that lower-income countries are again absorbing spillover from wealthier nations, including higher debt service costs and inflation.
Georgieva points to advanced economies
IMF chief Kristalina Georgieva said advanced economies were the worst offenders on budget imbalances. She noted that developing countries' debt levels had fallen in recent years, but surging bond yields elsewhere pushed up their borrowing costs.
Average debt service payments there had more than doubled from a decade ago to 14% of government revenue, she said, crowding out education and healthcare. On AI, Georgieva told a Saturday panel, according to Reuters: "We are in a place where we have many more questions than we have answers."
Experts see no concrete roadmap
Josh Lipsky of the Atlantic Council said the meetings missed their opportunity to offer guidance or ways to help. Mauricio Cardenas, Colombia's former finance minister, said the institutions offered no specific, concrete advice on preparing for AI.
Geopolitics also intruded. Nearly half the delegates at an IMF steering committee walked out when Russia's finance minister spoke, and Houthi attacks on Riyadh airport delayed the committee's head, Saudi Finance Minister Mohammed Al-Jadaan.
World Bank sees weaker growth
World Bank deputy chief economist Ayhan Kose said the global economy weathered its biggest energy shock, from the US-Israeli war on Iran, better than expected, and that a global recession had been avoided. Even so, he said growth outlooks in both developing and advanced economies were worse than before.
Growth in developing countries as a whole slowed to around 3.6% from 4.4%, Kose said. The bank announced no specific initiatives, but said it remains focused on helping developing countries prepare for AI by mobilising more private capital, now at triple the levels of 2022.
Source: Reuters via Investing.com
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