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IMF warns advanced economies must cut borrowing and debt-service costs
IMF chief Kristalina Georgieva said global shocks have raised debt burdens while governments have taken no steps to contain debt service costs, as borrowing costs surge amid oil driven inflation.
The IMF has warned that advanced economies including the UK and US need to cut borrowing and reduce government debt levels after weeks of spiralling interest costs, with the IMF managing director delivering the message at the United Nations General Assembly in New York, according to BBC Business.
In an exclusive interview, Kristalina Georgieva said global economic shocks have pushed debt levels higher, describing it as rising “like a staircase not to heaven,” and added that governments have taken “no action to contain that service cost.” She urged policymakers to bring debt levels down and prioritize fiscal consolidation, while also ensuring central banks meet their mandate for price stability.
BBC Business reports that the warning comes as government borrowing costs have surged, linked to wars disrupting oil supply and fueling inflation. In the UK, the latest figures cited show borrowing of £18.3 billion ($24.4 billion) in August, nearly a fifth higher than a year earlier, and debt interest at its highest August level since monthly records began in 1997.
The outlet also notes that higher borrowing costs are affecting the US, where the debt pile has surpassed $40 trillion and has doubled within a decade, raising concerns at home and abroad. Georgieva said while some economic factors are outside governments control, domestic policy choices remain within their command.