Low-income, vulnerable states: IMF urges members to stock up funds

According to Business Recorder, IMF head Kristalina Georgieva warned on Wednesday that current economic conditions and the fast rise of artificial intelligence could widen the divide between wealthier and poorer nations. She pointed to sharp reductions in development aid as an extra strain. She spoke at the yearly IMF and World Bank meetings in Bangkok, Thailand.

She said rising benchmark yields in wealthy countries are feeding through to emerging and low-income nations. Debt service now takes 14 percent of revenue on average, compared with 6 percent ten years earlier, even though total debt levels have eased. Officials from developing states estimate their extra debt service costs at USD500 billion relative to advanced economies, calling it a major obstacle to inclusive growth. Gambian finance minister Seedy Keita added that this leaves little room for infrastructure and human capital investment, since repayments are compulsory.

Georgieva urged countries to honour pledges to the Poverty Reduction and Growth Trust, which offers low and zero interest loans, and to replenish the Catastrophe Containment and Relief Trust, which provides grants for debt relief. Cameroon's finance minister Louis Paul Motaze, speaking for more than a dozen sub-Saharan African countries, said developing economies will still need support from international lenders. The IMF has also reached staff-level agreement on a USD2.2 billion lending programme for Senegal, which is seeking relief under the Group of 20 Common Framework.