IMF, World Bank Meetings Yield No New Answers for Developing Nations on War, Debt, and AI Risks

The International Monetary Fund and World Bank concluded their annual meetings in Bangkok on Oct. 18 without offering developing countries new solutions to a worsening array of challenges: a spreading Middle East war, the continuing war in Ukraine, rising debt payments, and a potential artificial-intelligence bubble.

Lower-income nations, according to officials and analysts at the meetings, are again absorbing the spillover from actions of wealthier economies — higher debt-servicing costs, elevated inflation, and the risk of being left further behind by the AI boom. The standard prescription from the global lenders remained unchanged: shrink fiscal deficits and accelerate economic reforms to attract more private investment.

IMF Managing Director Kristalina Georgieva, the first IMF chief from a developing nation (Bulgaria), pointed to advanced economies as the worst offenders on budget imbalances. She noted that while developing countries' debt levels had actually fallen in recent years, surging bond yields elsewhere drove their borrowing costs higher. Average debt-servicing payments in those nations have more than doubled from a decade ago to 14% of government revenue, crowding out spending on education, healthcare, and other critical areas, she said.

On a Saturday panel, Georgieva said many issues remained unresolved, particularly around AI. "We are in a place where we have many more questions than we have answers," she said. "And my alert to everybody is: Do not fall for the guys that pretend they have the answers. They are tricking you."

**Lack of Concrete Guidance**

Josh Lipsky, vice-president of international economics at the Atlantic Council think tank, said the meetings had missed their opportunity to provide guidance. "It’s hard to talk about the developing world when the advanced economies don’t have their act together and are at risk of a fiscal crisis," Lipsky said. He added that political situations in many countries made development aid "not a priority at the moment."

Mauricio Cardenas, Colombia’s former finance minister and now a research scholar at Columbia University, said many policymakers were left with a sense that "something really bad could happen" but no roadmap to navigate the future. "The IMF and World Bank are not particularly well prepared for this new phase. They understand that something is going on; they bring in experts on AI," Cardenas said. "But in the end, there’s no kind of specific, concrete advice on how to be prepared for something where you don’t really understand how it’s going to unfold."

**Geopolitical Tensions and Local Realities**

Geopolitical divisions that have roiled both institutions since Russia’s 2022 invasion of Ukraine were on display in Bangkok. Nearly half the delegates at an IMF steering committee walked out when Russia's finance minister spoke. Houthi attacks on Riyadh airport delayed the arrival of the committee's head, Saudi Finance Minister Mohammed Al-Jadaan, who had to travel overland to Qatar to catch a flight.

The venue itself underscored the vulnerabilities developing countries face. Bangkok was still partly under water after September floods that caused nearly $200 million in damage to Thailand’s industrial sector.

**Growth Slowdown and Debt Distress**

Ayhan Kose, deputy chief economist at the World Bank, said the global economy had weathered its biggest energy shock — from the US-Israeli war on Iran — better than expected, and a global recession was avoided. However, growth outlooks in both developing and advanced economies are worse than before. Growth has already fallen off in half of the advanced economies. In developing countries overall, growth has slowed significantly to about 3.6% from 4.4%.

"People are really worried because resilience today is not a guarantee for resilience tomorrow," Kose said. "Now they are worried about what will be the next shock, because every six months, if not every three months, there is a new shock."

While no specific initiatives were announced, Kose said the World Bank remains focused on helping developing countries prepare for AI advances, partly by mobilising more private capital, now at triple the levels of 2022. Still, the institution faces sharp drops in official development aid and persistent difficulties attracting foreign investment. "The reality on the ground is the reality on the ground," he said.

**Call for Inclusive Growth**

Kate Pickett, a professor at the University of York, urged policymakers to pursue more inclusive growth rather than forcing developing nations into tough structural reforms. "If inequality increases, if poverty deepens, that will increase their costs in the long term," Pickett said. "It’s not enough to describe an economy as resilient. It’s only resilient for the rich and the privileged."

Rising energy costs and climate disasters, according to a separate summary from Africanews, are pushing many developing nations into debt distress, while greater digital connectivity could allow them to benefit from AI advances.

The annual meetings left lower-income countries with more questions than answers — and warnings that the next shock may already be on the horizon.