IMF raises the alarm on threat to Global Economic Stability

The International Monetary Fund (IMF) has warned that rising public debt, inflationary pressures and geopolitical tensions threaten global economic stability.

IMF Managing Director, Kristalina Georgieva, gave the warning during the 2026 World Bank/IMF Annual Meetings Plenary on Friday in Bangkok, Thailand.

Georgieva said that the global economy remained resilient, with growth projected at 3.1 per cent in 2026, unchanged from the IMF’s forecast a year earlier.

She attributed the resilience to opposing forces, including energy supply disruptions weighing on growth and the Artificial Intelligence (AI) boom supporting economic activity.

Georgieva said that the economic performance varied significantly, with war-affected economies facing weaker growth prospects while countries linked to the AI value chain recorded improvements.

She identified rising debt, energy supply shocks, geopolitical tensions and rapid technological changes as major challenges confronting policymakers.

She said that high debt levels were reducing governments’ capacity to respond to economic shocks, while rising interest payments were crowding out development spending in low-income countries.

According to her, energy supply disruptions are pushing inflation upward while weakening growth, with shipping risks and shortages of refined petroleum products and natural gas worsening the situation.

Georgieva also said the rapid expansion of AI was increasing infrastructure investment needs, potentially adding to debt and short-term inflationary pressures.

“Productivity gains from AI are expected, although their scale and speed remain uncertain.

“Central banks will have to prioritise price stability, supporting recent monetary tightening by the United States Federal Reserve, European Central Bank and Bank of Japan.

“Timely interest rate increases are preferable to delayed action that could require more aggressive tightening later,” she said.

She said that monetary tightening could raise government borrowing costs, making credible fiscal consolidation essential for highly indebted economies.

Georgieva urged governments to develop medium-term fiscal plans, implement credible measures, protect vulnerable citizens and pursue structural reforms to strengthen economic growth.

She also called for greater preparedness for AI, warning that its risks included youth unemployment, erosion of tax revenues, financial instability and escalating cybersecurity threats.

“Stronger international cooperation is needed to improve cyber resilience, as weaknesses in one country’s digital systems could expose others to risks.

“The IMF continues to support member countries through financial assistance, surveillance, technical assistance and training to strengthen economic and financial systems.

“The Fund’s outstanding credit and undrawn commitments stand at 240 billion dollars, while concessional lending have reached 36 billion dollars,” she said.

Georgieva described the concessional lending figure as approximately four times its historical average.

She called on member countries to provide additional funding for the Poverty Reduction and Growth Trust (PRGT), which supports the Fund’s poorest and most vulnerable members.

She said 39 countries had provided assurances representing about 48 per cent of the required support, while efforts were ongoing to raise the figure to 90 per cent.

Georgieva also said that the IMF secured more than 100 million dollars in new commitments for capacity development during the annual meetings.

She urged countries to address global economic imbalances, arguing that the United States needs to save more; China to consume more; and Europe to invest more.

She said that coordinated international action remained essential to managing economic risks and ensuring that technological advances and economic progress benefited people across the world.

Credit NAN; Texts excluding Headline

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IMF hails Nigeria’s Economic Growth Outlook, backs CBN's Monetary Policy Adjustment

The International Monetary Fund (IMF) has backed the Central Bank of Nigeria’s (CBN) monetary policy adjustment, describing it as appropriate amid declining inflation.

The Director of the IMF’s African Department, Zeine Zeidane, said this at the African Department news briefing during the ongoing IMF/World Bank Annual Meetings in Bangkok, Thailand.

Zeidane said that Nigeria had made significant progress in reducing inflation, creating room for the CBN to normalise monetary policy without adopting an accommodative stance.

He said that the adjustment would lower the real interest rate but stressed that the overall monetary policy stance remained tight.

Zeidane said that the adjustment did not amount to monetary easing, the CBN’s overall policy stance remained restrictive.

Beyond monetary policy, he highlighted improvements in Nigeria’s macroeconomic conditions, supported by higher oil prices, increased foreign exchange receipts and rising external reserves.

Zeidane urged the government to increase non-oil revenue to create fiscal space for critical sectors, including education, healthcare and infrastructure.

He said that Nigeria’s large market, young entrepreneurs and technology-savvy population offered significant investment opportunities if structural constraints were addressed.

Zeidane stressed the need for reforms in governance, the business environment and economic integration to accelerate growth and create jobs.

On energy subsidies, he advised the government to direct savings from subsidy reforms towards vulnerable households rather than maintaining broad-based support.

Zeidane said that energy subsidies often benefited wealthier segments of the society disproportionately, limiting the support available to people who needed it the most.

He urged governments to phase out subsidies gradually and ensure the resulting savings were targeted at vulnerable households.

The Deputy Director of the IMF’s African Department, Montfort Mlachila, said that improved external conditions had strengthened Nigeria’s growth prospects.

He said that higher oil prices had increased foreign exchange receipts and reserves, contributing to improved liquidity in the economy.

Mlachila said that the IMF projected Nigeria’s economy to grow by 4.2 per cent this year, up from 4.0 per cent in 2025, with growth expected to reach 4.3 per cent next year.

He attributed the projected growth partly to favourable external conditions, adding that the services sector remained the main driver of economic activity.

Mlachila also said that declining inflation since 2025 had improved Nigeria’s macroeconomic conditions and foreign exchange availability.

He said that sustaining stronger growth would require deeper structural reforms, improved domestic revenue mobilisation and a better business environment to attract private investment.

In its latest Regional Economic Outlook, the IMF said that foreign exchange market reforms and fuel subsidy reductions in Nigeria and Ethiopia had supported more stable macroeconomic conditions.

The report added that the improvements in fiscal revenue and monetary frameworks had created a clearer basis for private investment across the region.

Credit NAN: Texts excluding Headline