Rich nations must cut debt as global shocks push up borrowing costs, IMF chief tells BBC

The world's advanced economies, including the UK and US, need to cut borrowing and reduce debt levels following weeks of spiralling government interest costs, the head of the International Monetary Fund (IMF) has warned.In an exclusive interview, Kristalina Georgieva said global economic shocks had been "pushing debt levels up like a staircase not to heaven", but that governments had taken "no action to contain that service cost"."[It's] time to take that action," she said, adding that politicians needed "courage" to take the necessary steps.The intervention comes as government borrowing costs have surged in response to wars disrupting oil supplies, which has fuelled inflation.Higher global borrowing costs have hit the UK government ahead of UK Prime Minister Andy Burnham's first Budget next month, with speculation building over potential tax and spending policies.The latest figures show borrowing - the difference between tax receipts and government spending - was £18.3bn ($24.4bn) in August, almost a fifth higher than the year before and higher than official forecasts. Meanwhile, debt interest for the month was the highest August figure since monthly records began in 1997.Higher borrowing costs have also hit the US, the world's largest economy, whose debt has surpassed $40tn. The amount has doubled in a decade, prompting concerns at home and abroad.On the sidelines of the United Nations General Assembly, Georgieva said the IMF's message to advanced economies was that while economic factors occur outside governments' control, they still control domestic policies."There are these two things that must be done: bring debt levels down, put fiscal consolidation as a priority, and make sure that the central banks deliver on their mandate for price stability," she said."It is impossible to stress strongly enough how critical it is to get the courage to take the steps that are necessary. These are politically tough steps to take, but necessary steps to take."Asked specifically about the UK's higher interest costs compared to other major economies, Georgieva said its position was "not very different" from others.She pointed to "fairly consistent action" on lowering debt. She praised planning and housing reforms, adding that advanced economies "don't have the cash" to boost growth and had to rely on reforms to encourage private-sector investment.AI could present 'financial stability risk'Governments around the world raise money by selling bonds - essentially an IOU - and in return pay interest to the investment funds that buy them.Concerns over inflation eating away at returns have sent the interest rates on bonds - known as yields - higher in recent months.But other factors are pushing yields up, including increasing competition in the bond market from large tech companies looking to raise huge amounts of money to invest in artificial intelligence (AI) development.On AI, Georgieva cited recent concerns about losing safe control over such systems as a potential financial stability problem, alongside debt levels."If we see more incidents when AI takes [on a] life of its own, then we can be faced with a significant financial stability risk," she said.The IMF's managing director repeated the influential body's assessment that the global economy was affected by two forces "pushing in opposite directions" - the energy price shock and investment in AI.She said it was important for low oil and gas exports from the Gulf "to resume durably, for the energy supply shock to be in the rearview mirror finally"."That is a very significant step to normalisation," she said, but acknowledged it was yet to happen.

Rich nations must cut debt as global shocks push up borrowing costs, IMF chief tells BBC

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Namibian Sun 2026-09-24

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Rich nations must cut debt as global shocks push up borrowing costs, IMF chief tells BBC

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Namibian Sun 2026-09-24

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