International Monetary Fund (IMF) Managing Director Kristalina Georgieva has urged wealthy countries, including the United Kingdom and the United States, to take action to reduce their growing debt as borrowing costs continue to rise.
Speaking to the BBC during the United Nations General Assembly in New York, Georgieva said a series of global economic shocks had pushed government debt higher. She warned that countries could not continue allowing the cost of servicing their debt to grow without taking action.
She called on governments to make reducing debt and controlling public finances a priority, while central banks continue working to keep inflation under control.
The warning comes as higher interest rates and increased energy costs put pressure on governments around the world. Conflicts affecting oil supplies have contributed to higher energy prices and added to inflation concerns.
The UK is among the countries facing increased pressure on its finances. Government borrowing reached £18.3 billion ($24.4 billion) in August, according to the latest figures cited by the BBC. Debt interest payments also reached their highest level for August since records began in 1997.
The United States is facing similar concerns. Its national debt has passed $40 trillion, having doubled over the past decade.
Georgieva said advanced economies have limited room to use government spending to support economic growth. Instead, she said reforms that encourage private investment would be important.
She also warned that the rapid growth of artificial intelligence could create new risks for financial stability.
Large technology companies are raising significant amounts of money to invest in AI, increasing competition for funds in bond markets. Georgieva said serious problems involving AI systems could also create wider financial risks.
The IMF chief said the global economy is currently being affected by two major forces: higher energy costs and strong investment in AI.
She said a lasting recovery in oil and gas exports from the Gulf region would be important for reducing the pressure caused by the energy shock.
However, she acknowledged that the situation had not yet returned to normal.
Georgieva said governments face difficult decisions, but argued that action on debt and public finances was becoming increasingly important as economic pressures continue.
