IMF Director Urges Fiscal Resilience Amid Global Challenges

Georgieva called on countries to make efforts regarding their budgets, given the rising interest rates and the significant volume of debt. These efforts are deemed necessary to confront the challenges witnessed in recent years, starting from the pandemic to the war in Ukraine and the sharp inflation. She stated that “the debt problem has become serious in some countries, either unable to repay their debts or forced to spend a large portion of their revenues to service the debts,” limiting their ability to invest and fund essential services.

She continued by emphasizing that “even if debt service (the annual cost of repaying a borrowed amount with interest) has increased in all countries,” the level recorded “remains manageable in many countries that wisely manage a significant portion of it and adjust their debt structure.” Georgieva stressed the need for countries to “reconfigure their budget reserves,” as they must be “constantly prepared to face any unforeseen developments.”

She explained that this step requires a margin in public finances, something many countries no longer have after three years of recurring crises. She pointed out that expansionary fiscal policy could counteract the effects of monetary policy to bring inflation back to more acceptable levels, but this might prolong the time needed to achieve this goal.

Georgieva, whose term ends at the end of September, also touched on the factor of elections, stating that “around 80 countries will hold elections in 2024, and we understand the pressure elections bring, especially in terms of spending.” She emphasized that “this year will be tough” and that “we must be prepared for any upcoming twists and turns.”