The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, has warned that the resilience capacity of the global economy is running out and that countries must urgently clean up their public accounts, given that "winter is coming," in addition to correcting the growing global imbalances. In this context, she has reiterated that "China needs to spend more; the United States needs to save more; and Europe needs to invest more."
In an appearance before the press in Bangkok, coinciding with the IMF and World Bank's autumn meetings, the Bulgarian economist detailed that the rise in debt levels and the cost of financing it, which has advanced economies as "the most affected," is due to persistent inflation, a greater demand for profitability from investors, expectations of future growth linked to AI, and ultimately, to fiscal fundamentals.
"Too many countries did not take advantage of the post-pandemic recovery to rebuild their fiscal reserves, and each new disruption has raised debt levels," she pointed out, before urging executives to "repair public finances urgently before the cracks worsen" through increased revenue, streamlined spending, and better management of public accounts.
In light of the rising costs of energy and food, Georgieva emphasized that it is essential to "protect people, not prices," which involves providing temporary and well-targeted aid to the most vulnerable groups, while maintaining price signals in the markets.
The head of the IMF also recalled the reference to the 'A Song of Ice and Fire' saga, popularized by the 'Game of Thrones' series, with the warning that "winter is coming," with which she inaugurated last week the cycle of meetings of the Fund. As she explained, on one hand, it reminds that the arrival of winter in the northern hemisphere will increase energy demand, push prices up, and weigh down activity, and on the other hand, it serves as a warning against the risk of falling into complacency after having overcome successive crises.
"Be aware of the exhaustion of these sources of resilience and make sure you are prepared if conditions become more difficult to face," she insisted.
At the same time, the managing director of the IMF has directly pointed to China and the United States, along with several European countries, as "the main contributors" to the increase in global imbalances.
In this regard, she has called for economies with surpluses to strengthen domestic demand, while those with deficits must increase savings, cut debt, and reduce the budget imbalance. "China needs to spend more; the United States needs to save more; and Europe needs to invest more," Georgieva has reiterated.
In relation to the world's leading power, the head of the Fund has indicated that the U.S. authorities themselves admit that the deficit has skyrocketed and that the volume of debt is too high. However, she has warned Washington that, in addition to relying on vigorous economic growth to lower the debt ratio, the IMF estimates that "some additional measures" will be necessary to achieve the required fiscal adjustment with the necessary speed.