IMF calls for support for poorer countries facing high inflation and fallout from war | News on poverty and development

Low-income countries spend up to 14% of their income on debt repayment, according to the IMF chief.

The International Monetary Fund (IMF) has a responsibility to help poorer countries struggling with growing debt, high inflation and price shocks caused by the fallout from war, the head of the International Monetary Fund has said.

Speaking as the IMF’s annual meetings in Bangkok concluded on Saturday, Managing Director Kristalina Georgieva said discussions with global policymakers showed both “optimism and concern”.

“Optimism comes from the resilience of the global economy, from the promise of AI, from the dynamism of Asia,” Georgieva told reporters. “But AI is also recognized as a source of concern, as are inflation, high debt levels, wars and climate risks. »

Georgieva said vulnerable countries are missing out on the AI ​​investment boom that is driving growth in richer countries, while facing higher borrowing costs.

Rising global interest rates mean that low-income countries now spend 8 to 14 percent of their income on debt repayments, an increase from previous years, she said.

“I can tell you that all over the world, but especially in poorer countries, people don’t like inflation. Inflation is like a tax on the poor,” Georgieva said.

The warnings come as low-income, oil-importing countries are hit hardest by rising global energy costs. Prices have soared since February, when the United States and Israel launched a war against Iran, leading to retaliations in the Middle East and disrupting oil and gas flows.

“Escalating conflicts and trade tensions could further disrupt critical trade routes, exacerbate price pressures on raw materials, including refined energy products, and worsen energy and food security,” Saudi Finance Minister Mohammed Al-Jadaan, chairman of the International Monetary and Financial Committee (IMFC), said in a released statement.

The IMFC is the crisis lender’s main steering committee made up of 191 members.

Debt relief and regional support

Georgieva said her organization has a responsibility to help countries restructure their debt where necessary to help mobilize domestic resources, attract international financing and create favorable conditions for private investment.

These countries must set spending targets that prioritize growth and protect the most vulnerable, she said, adding that the IMF “relentlessly seeks more resources for low-income countries.”

“When we do our best, it translates into better lives for people,” she said.

Georgieva also said the IMF planned to support Iraq “very strongly” with a requested loan program while negotiations with Lebanese authorities progressed.

“We will provide Iraq with both money and political support,” she said. “In the case of Lebanon, we are in very intense discussions with the Lebanese authorities. We have made significant progress towards the program. We still have some work to do together and I am confident that we will succeed.”