In a firm call to action ahead of the IMF and World Bank Spring Meetings, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), urged governments around the world to urgently implement reforms that strengthen their economies amid growing global uncertainty.
“All countries must redouble efforts to put their own houses in order,” Georgieva said during her curtain-raiser speech delivered in Washington. “In a world of higher uncertainty and frequent shocks, there is no room for delay in reforms to enhance economic and financial stability and improve growth potential.”
Her comments come as the world grapples with a volatile mix of economic aftershocks from the COVID-19 pandemic, rising debt burdens, geoeconomic fragmentation, and climate pressures. While acknowledging the resilience shown by the global economy, she cautioned that it is still “limping along, not sprinting,” and emphasized the need for immediate action to avoid complacency.
“Most countries are in a weaker fiscal position than they were five years ago. Public debt is near record highs. In this environment, rebuilding fiscal space is paramount,” Georgieva stated. For most economies, she added, adopting resolute fiscal strategies now, while remaining flexible in the face of future shocks, would be critical. However, she made it clear that the hardest choices would be faced by low-income countries. “Tighter budget constraints will entail difficult choices everywhere, but nowhere more so than in low-income countries,” she said, stressing that these nations would need stronger domestic resource mobilization, along with sustained international support.
Georgieva also underscored the importance of preserving central bank independence and calibrating monetary policy to fit country-specific conditions. She called for stronger regulation of both banks and non-bank financial institutions to safeguard against systemic risks, particularly in an environment where interest rates may stay higher for longer. “To protect price stability, monetary policy must remain agile and credible, supported by a strong commitment to central bank independence,” she said. “Central bankers must keep an eagle eye on the data, including higher inflation expectations in some cases.”
In response to rising global trade tensions, the IMF chief offered a vivid analogy: “Trade is like water: when countries put up obstacles in the form of tariff and non-tariff barriers, the flow diverts. But disruption comes at a cost, to productivity, living standards, and the global economy.”
Georgieva further urged nations, especially emerging markets, to embrace exchange rate flexibility as a vital buffer against external shocks. “The state can and should do much more to reduce obstacles to private enterprise and innovation, in other words, eliminate self-inflicted injuries,” she stated, encouraging governments to invest in structural reforms that can unlock private sector growth.
While emphasizing the need for stronger global cooperation, Georgieva was clear that domestic readiness is the foundation. “With cool heads, clear vision, and strong will, times of change can be times of renewal,” she said. “The secret to seizing the moment is to focus all energy not on preserving the old, but on building the new, a better balanced and more resilient world economy.”
Laying out a roadmap for navigating today’s complex global economic landscape, Georgieva stressed the need for agile and credible monetary policy, underpinned by strong central bank independence. “In finance, strong regulation and supervision remain essential to keep banks safe, and rising risks from nonbanks must be monitored and contained,” she said.
Turning her attention to countries with unsustainable debt levels, Georgieva called for proactive measures to restore fiscal sustainability. “Countries with unsustainable public debt should move proactively to restore sustainability,” she said. “In some cases, that means taking the difficult decision to seek debt restructuring.” She revealed that the Global Sovereign Debt Roundtable will soon publish a playbook to guide country authorities through debt restructuring processes, offering clarity and structure as many low-income and emerging economies face deep fiscal uncertainty.
Her call to action was not just for governments to act alone but for stronger, more coordinated efforts at both the domestic and international levels. “Tighter budget constraints will entail difficult choices everywhere, but nowhere more so than in low-income countries,” she added. These nations, she emphasized, need both enhanced domestic resource mobilization and the continued support of international partners to weather the storms ahead.
