IMF warns debt costs are squeezing poorer countries as growth outlook holds at 3.1%

At the IMF–World Bank annual meetings in Bangkok on Wednesday, October 14, Managing Director Kristalina Georgieva warned that the United States and other wealthy economies cannot rely on growth alone to bring down rising debt. The warning adds a concrete fiscal risk to the IMF’s October outlook: global growth is holding up, but financing costs and the energy shock are narrowing governments’ room to respond. The IMF’s October 13 World Economic Outlook projects global growth of 3.1% in 2026, up from the 3.0% forecast in July, and 3.4% in 2027. The modest upgrade reflects resilience partly supported by AI-related investment. The fund’s baseline assumes an average oil price of $96 a barrel this year and that shipments through the Strait of Hormuz resume by March 2027; those are assumptions, not guarantees. A prolonged disruption or a pullback in AI spending could weaken the outlook. Georgieva told the Associated Press that the U.S. national debt is above $40 trillion and that expanding the economy would not by itself deliver the adjustments needed to reduce the deficit. She called for tighter fiscal policy. Reuters separately reported her warning that higher benchmark yields in advanced economies are spilling into poorer countries; average debt-service costs there have risen to 14% of government revenue, from 6% a decade ago. The IMF’s Fiscal Monitor puts global public debt at nearly 94% of GDP in 2025 and projects it could reach 100% by 2029 if current trends continue. The report says interest payments in low-income developing countries reached 2.3% of GDP, or nearly 15% of revenue, in 2025. These are group-wide figures, not the experience of every country. When more public revenue goes to debt service, governments have less room for health, education and investment, especially as development aid declines. The IMF is urging governments to reduce deficits before markets force sharper adjustments, while protecting essential services. It has not prescribed one identical plan for every country; tax capacity, spending pressures and debt conditions differ. The next test is whether governments respond to the higher borrowing costs and whether energy shipments through Hormuz normalize on the WEO’s assumed timetable. The IMF’s release and outlook set out the growth figures and assumptions: https://mediacenter.imf.org/news/imf---world-economic-outlook-annual-meetings--2026/s/22f94667-d194-473b-87b2-34c692b5a5a3 The new debt warning was reported by the Associated Press: https://apnews.com/article/economy-imf-debt-bessent-us-china-f7f4c11e3b99c18ec6c49fdedeb95845 Reuters reported the debt-service comparison, while the IMF’s Fiscal Monitor provides the debt and revenue data: https://uk.marketscreener.com/news/imf-urges-members-to-stock-up-funds-for-low-income-vulnerable-states-ce785dd2db81f32d https://www.imf.org/-/media/files/publications/fiscal-monitor/2026/april/english/text.pdf ~worldnews ~ai ~energy