IMF, World Bank meetings leave developing world without answers on debt, conflict and AI risks

BANGKOK — The IMF and World Bank wrapped up their annual meetings last week with developing countries still waiting for answers on the questions that dominated the agenda: a spreading Middle East war, the continuing war in Ukraine, rising debt payments and a potential artificial intelligence bubble.

What lower-income economies got instead, according to the accounts of officials and delegates at the meetings, was the standard prescription: shrink fiscal deficits, accelerate economic reforms and attract more private-sector investment. The message landed as developing nations absorb the spillovers of wealthier countries' actions — rising debt-service costs, higher inflation and the risk of falling ever further behind economically as the AI boom takes hold.

IMF Managing Director Kristalina Georgieva, the first IMF chief from a developing nation, Bulgaria, pointed the finger at advanced economies, saying they were the worst offenders on budget imbalances. Georgieva noted that developing countries' debt levels had actually fallen in recent years, only for surging bond yields elsewhere to drive up their borrowing costs. Average debt-service payments in developing economies have more than doubled from a decade ago to 14% of government revenue, she said — crowding out education, healthcare and other critical areas.

At a panel on Saturday, Georgieva conceded the limits of what the institutions could offer, particularly on 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."

**Critics see a missed opportunity**

Outside economists were blunter. Josh Lipsky, vice president of international economics at the Atlantic Council think tank, said the meetings had flunked their opportunity to produce guidance or ways to help. "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," he said. "And that's on top of political situations in many of these countries that makes development aid not a priority at the moment."

Mauricio Cardenas, Colombia's former finance minister and now a research scholar at Columbia University's School of International and Public Affairs, said many policymakers were left with a deep sense that "something really bad could happen" — but no real roadmap to navigate the future.

"The IMF and World Bank are not particularly well prepared for this new phase," Cardenas said. "They understand that something is going on, they bring in experts on AI. 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."

**Geopolitics intrudes again**

The tensions that have roiled both institutions since Russia's invasion of Ukraine in 2022, complicating concerted action, were on display in Bangkok: nearly half the delegates at an IMF steering committee walked out when Russia's finance minister spoke.

Even getting to the meetings proved hazardous for the committee's head, Saudi Finance Minister Mohammed Al-Jadaan. Houthi attacks on Riyadh airport delayed his arrival, forcing him to travel overland to Qatar to catch a flight.

Bangkok itself was a reminder of the vulnerabilities facing developing countries: parts of the city remained under water after September floods that caused almost $200 million in damage to Thailand's industrial sector.

**Growth slows as shocks keep coming**

World Bank Deputy Chief Economist Ayhan Kose said the global economy had weathered its biggest energy shock — stemming from the US-Israeli war on Iran — better than expected, and a global recession had been avoided. But growth outlooks in both developing and advanced economies were worse than before, he said.

Growth had already fallen off in half of advanced economies, Kose said, while developing countries as a whole slowed to around 3.6% from 4.4%.

"People are really worried because resilience today is not a guarantee for resilience tomorrow," he 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."

The World Bank announced no specific initiatives, but Kose said it remained focused on helping developing countries prepare for advancements in AI, in part by mobilising more private capital — now at triple the levels of 2022. He also flagged sharp drops in official development aid and persistent challenges in attracting foreign investment. "The reality on the ground is the reality on the ground," he said.

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

Separately, Africanews reported that while the AI boom is lifting technology-exporting economies, rising energy costs and climate disasters are pushing many developing nations into debt distress — and that greater digital connectivity would allow them to benefit from the tech advances.