The head of the International Monetary Fund (IMF), Kristalina Georgieva, has issued a stern warning to advanced economies, calling for an immediate reduction in public debt and a curb on borrowing. In an interview with the BBC, she emphasized that the rising cost of debt servicing is creating unprecedented pressure on public finances, particularly in the US and the UK.
Pressures on the US and the UK
According to Georgieva, successive economic shocks have pushed debt to dangerous levels. In the United Kingdom, government borrowing in August reached £18.3 billion, a nearly 20% increase compared to last year. Furthermore, interest payments were the highest recorded for the month of August since records began in 1997.
A similar picture emerges in the US, where public debt has now surpassed the $40 trillion milestone, having doubled within a decade. Georgieva stressed that political "courage" is required for fiscal consolidation, as governments no longer have the fiscal space to support growth through increased spending.
AI as a Systemic Risk
Beyond fiscal matters, the IMF chief expressed strong concerns regarding the rapid development of artificial intelligence. She warned that instances where AI systems "acquire a life of their own" and safe control is lost could pose a significant risk to financial stability.
Additionally, she noted that major tech companies are now competing with sovereign states in bond markets, seeking vast amounts of capital for AI investments. The global economy, according to Georgieva, is currently caught between two opposing forces: the energy shock and the AI revolution, making the need for stability more urgent than ever.
