The International Monetary Fund has called on member countries to strengthen financial support for low-income and vulnerable economies, warning that rising debt-servicing expenses and changing global economic conditions could widen the gap between advanced and developing nations.
IMF Managing Director Kristalina Georgieva made the appeal during the annual meetings of the International Monetary Fund and the World Bank in Bangkok, Thailand. She highlighted the combined pressure created by higher borrowing costs, declining development assistance, elevated fuel and food expenses, and uncertainty surrounding global investment.
Editorial Insight
Key Highlights
Important points readers should notice.
Issue/Event: IMF warns that rising debt-servicing costs and weaker development assistance are putting pressure on vulnerable economies.
Location: Bangkok, Thailand, during the IMF and World Bank annual meetings.
Authority/Organisation: International Monetary Fund.
Action Taken: IMF Managing Director Kristalina Georgieva urged member countries to fulfil funding commitments to key concessional lending and debt-relief trusts.
Impact: Higher debt payments may limit public investment and make it more difficult for developing countries to sustain economic growth.
According to the IMF chief, average debt-servicing costs for affected countries have risen substantially over the past decade. The share of government revenue used to service debt has increased from approximately 6% a decade ago to around 14%, leaving governments with less room to fund public services and long-term development priorities.
Debt servicing includes payments of interest and principal on government borrowing. When a larger share of public revenue goes towards these obligations, governments may face difficult choices over spending on infrastructure, healthcare, education and other essential services.
Georgieva urged IMF member countries to fulfil their funding commitments to the organisation's Poverty Reduction and Growth Trust and its Catastrophe Containment and Relief Trust. These mechanisms support eligible low-income and vulnerable member countries through concessional financing and, where applicable, debt-service relief.
Editorial Analysis
Why This Matters
Public spending: Governments facing higher repayment obligations may have less fiscal room for healthcare, education and infrastructure. Economic development: Limited access to affordable financing can delay projects intended to improve productivity and employment. Global inequality: Countries with weaker access to capital may struggle to benefit equally from new technologies and international investment. Financial stability: Expensive refinancing can increase pressure on government budgets, particularly when economic growth slows. International cooperation: Funding for concessional lending and debt relief can help eligible countries respond to financial shocks and qualifying emergencies.
The Poverty Reduction and Growth Trust provides low-interest or zero-interest lending to eligible low-income countries. The Catastrophe Containment and Relief Trust can provide grants that help eligible countries meet debt-service obligations following qualifying catastrophic events.
The IMF has restructured its concessional lending arrangements to expand available support, but continued financing depends on contributions from member countries. Additional resources are particularly important when vulnerable economies face multiple pressures at the same time.
The debt challenge is not limited to the size of a country's outstanding borrowing. The cost of refinancing, the interest rate on new loans, currency movements and the availability of affordable long-term finance can all affect a government's ability to manage its obligations.
Developing countries can also face higher financing costs when investors become more cautious about emerging markets. If international interest rates remain elevated, governments seeking to refinance maturing debt may have to borrow at less favourable terms.
Officials from developing economies have warned that growing debt-service requirements can restrict their ability to invest in infrastructure and human capital. Money allocated to repayments cannot simultaneously be used for new roads, schools, hospitals or programmes intended to improve workforce skills.
Georgieva also highlighted the economic risks associated with rapid advances in artificial intelligence. While new technologies can improve productivity and create investment opportunities, the benefits may be distributed unevenly between countries with different levels of infrastructure, capital and technical expertise.
The IMF has forecast global economic growth of 3.1% in 2026, while warning that growth is expected to slow in nearly all developing economies. The outlook underscores the importance of affordable financing, productive investment and international cooperation for countries seeking to maintain economic progress.
The organisation has also pointed to risks associated with rising government debt, a possible slowdown in AI-related investment and a prolonged conflict in the Middle East. These developments could affect investment decisions, energy costs and financial conditions across different regions.
For vulnerable economies, the central challenge is to meet existing financial obligations without sacrificing essential development spending. The IMF's latest appeal places renewed attention on the role of international financial institutions and their member governments in helping countries manage debt-related pressures.
