By Francis Ntow, GNA
Accra, Oct. 8, GNA – The global economy cannot rely on the Artificial Intelligence (AI) boom to overcome rising public debt, energy shocks and high borrowing costs, the International Monetary Fund (IMF) has cautioned.
The Fund said although AI-related investment was supporting growth and trade, inflationary pressures from energy and food shocks, tariffs, defence spending and high public debt remained significant risks.
Ms Kristalina Georgieva, IMF Managing Director, said this while speaking at the Lee Kuan Yew School of Public Policy in Singapore ahead of the IMF-World Bank Group annual meetings in Thailand next week.
She urged governments and finance chiefs to act decisively to safeguard economic stability, rebuild fiscal buffers and sustain inclusive global growth.
Ms Georgieva said AI-related trade was expanding, reflecting an investment boom in economies integrated into its value chain, but cautioned that inflation could resurface despite recent progress.
“… but let us not forget the simple fact that inflation is only anchored until it is not.
“The AI building boom is inflationary. The energy and food shocks are inflationary. Tariffs, defence spending, and high public debt can be inflationary,” she said, noting that the global economy was facing a challenging period.
“We are in a tougher position. So, if we were to rely on growth to take us out of the fiscal hole, we may be deeply disappointed. Without fiscal efforts, we cannot get back to fiscal sustainability,” the IMF Chief added.
Ms Georgieva said interest rates had remained below economic growth rates for 17 years, making public debt easier to manage, but that period had ended.
She said assuming that AI-driven growth would be sufficient to repair public finances could instead deepen global economic vulnerabilities.
On measures to address the challenges, Ms Georgieva recommended that high-debt advanced economies adopt credible medium-term fiscal consolidation plans, supported in some cases by upfront measures to ease pressure on monetary policy.
For emerging markets, she called for measures to expand fiscal space and strengthen foreign exchange buffers, while noting that low-income countries were being forced to cut essential development spending to manage fiscal pressures.
“Putting all of it together, my message to the world’s economic policymakers next week will be this: we cannot keep delaying necessary policy action – you have the tools, now have the wisdom to use them,” she said.
Ms Georgieva said the 191 IMF member countries would focus at the annual meetings on three major concerns: an uneven AI boom that could widen inequality, energy prices approaching US$100 a barrel, and public debt nearing 100 per cent of global Gross Domestic Product (GDP).
She welcomed interest-rate increases by the United States Federal Reserve, the European Central Bank and the Bank of Japan, but said central banks still had work to do, recommending regulation and supervision as the first line of defence.
Tharman Shanmugaratnam, President of Singapore, underscored the role of monetary authorities in containing economic pressures and cautioned against governments imposing their will on central banks or treating them as extensions of fiscal policy through measures such as quantitative easing.
“Governments are now starting from a position of large fiscal deficits and very high debts as a starting point. Their ability to deal with future crises is now much constrained. Their room for manoeuvre is much constrained.
“If you get another COVID-like situation, or a recession, or some turbulence in the AI cycle and capex gets withdrawn very quickly, governments cannot step in the way they did in COVID because [there is] no fiscal space,” he said.
GNA
Edited by Kenneth Sackey
08 October 2026
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Reporter: Francis Ntow
Email: [email protected]