IMF Calls for Financing for Low-Income Countries

IMF Head Kristalina Georgieva warned on Wednesday that current economic shifts and the rapid advance of artificial intelligence are deepening the gap between advanced and developing economies, and called for financing for low-income and vulnerable countries.

According to Ambassador Arjan, Georgieva stated that the International Monetary Fund accepts its responsibility to provide financial assistance to countries in times of need and called on the member countries to fulfill their obligations to increase the financial resources of the "Poverty Reduction and Growth Promotion Fund" (PRGT); A fund that provides low- or zero-interest loans to low-income countries.

He added: This fund has also asked the members to replenish the resources of the "Disaster Containment and Relief Fund" (CCRT). This specialized fund provides grants to reduce or forgive the debt repayment costs of the poorest and most vulnerable member countries.

Georgieva, who is considered to be the first head of the International Monetary Fund from a developing country, said that the increase in bond yields (as a reference rate) in advanced economies has also spread to emerging markets and low-income countries. He noted that average debt repayment costs have increased from 6 percent of revenues a decade ago to 14 percent, even as the overall debt burden has decreased relatively.

The head of the International Monetary Fund said at a news conference on the sidelines of the annual meetings of the International Monetary Fund and the World Bank in Bangkok, Thailand: "The risk of divergence (economic gap) poses the greatest threat to countries that are already behind the development curve."

He added: The increase in fuel and food costs, the reduction of development aid, and the decrease in the desire for riskier investments, despite years of hard work, have put additional pressure on many of these countries.

The International Monetary Fund this week warned of significant risks to growth and financial stability from the potential end of the artificial intelligence investment boom, rising debt levels and continued conflicts in the Middle East. This global lender predicted the growth rate of the global economy this year at 3.1 percent and announced that almost all developing economies are expected to see slower growth in 2026.

Officials in developing countries warn that rising debt servicing costs are a major obstacle to inclusive growth. Developing countries are paying $500 billion more than developed countries on their debt despite facing widening budget deficits, Nigerian Finance Minister Taiwo Owidele, who chairs the Group of 24 developing countries, said on Tuesday.

Advanced economies such as the United States have been the "worst offenders" in not rebuilding financial shocks since the Covid pandemic, while many developing countries have worked to increase their resilience by strengthening their institutions, Georgieva said.

Without giving details on missed or delayed commitments, he said the IMF had restructured the "Poverty Reduction and Growth Promotion Fund" to triple lending to these countries, but members must meet their financial commitments.

According to a Reuters report, the International Monetary Fund also called for participation in the "Disaster Prevention and Relief Fund", which is in urgent need of replenishment given its frequent use in recent years.