The Jubilee Blog

IMF Forecasts Low Growth, High Debts and Prices

"...our forecasts point to an unforgiving combination of low growth and high debt—a difficult future," stated IMF Managing Director Kristalina Georgieva speaking ahead of the Annual Meetings of the IMF and World Bank. Georgieva noted that public debt is higher than before the pandemic and in spite of declining inflation, prices remain high.

“While we experience lower inflation, prices for groceries will remain high for all of us,” said Eric LeCompte the Executive Director of Jubilee USA Network who attends the meetings. “Not enough jobs, high debt payments and food prices are impacting the poor the most.”

The role of the IMF in debt relief and restructurings will be on the agenda at the meetings. In June, Pope Francis called for urgent action on debt forgiveness and new international vehicles to address debt crises, in the lead up to the Jubilee 2025 year.

"Debating solutions for debt crises, that affect most developing countries, dominates the agenda of the upcoming meetings," shared LeCompte.

Georgieva noted that expanding conflicts could destabilize markets and economies and countries are making hard choices to address climate change or poverty.

"In addition to the loss of life because of war, there is a global human cost as war derails cooperation for global agreements on poverty, jobs and climate issues," explained LeCompte. "Georgieva stressed the stark choices that too many countries face to pay debt, address climate challenges or build schools."

Delivering her first curtain-raiser speech since members appointed Georgieva to a second term at the helm of the institution, she raised the need to regulate artificial intelligence as it could have a role in managing aspects of the global economy.

"Given artificial intelligence is being raised as a way to strengthen the economy, it is crucial that all of us participate in the decisions of if, how and where AI is used and who controls AI," said LeCompte. 

Pope Francis addressed the recent G7 Summit on the ethical implication of artificial intelligence.

The managing director's speech alluded to recent IMF decisions lowering high surcharges that countries pay on loans and increasing capacity to lend at zero percent interest rate to the poorest countries.

“Surcharges punish countries experiencing a crisis,” noted LeCompte. “The decision to lower the surcharges is a necessary step, but more action on surcharges is needed.”

Read Kristalina Georgieva's curtain-raiser speech here.

Read Pope Francis' June address on the focus of Jubilee 2025 here.  

Read Jubilee USA Network and Friedrich-Ebert-Stiftung New York Office's "Debt Sustainability Assessments and their Role in the Global Financial Architecture" paper series here. 

Nobel Laureate, Former Economy Minister and Economic Experts Propose Improving IMF and World Bank Debt Analysis

Nobel Prize-winning economist Joseph Stiglitz and former Argentina Economy Minister Martin Guzman authored a study to improve how the IMF and World Bank analyze debt problems. The paper is part of “Debt Sustainability Assessments and their Role in the Global Financial Architecture,” a four-part series to appear as chapters in a book this fall. The papers are commissioned by the religious development group Jubilee USA Network and German foundation Friedrich-Ebert-Stiftung. The studies were presented to IMF and World Bank executive directors on September 5th, 2024.

The IMF and World Bank conduct debt sustainability analyses that guide prevention and solutions for debt crises. The experts assert that recent debt restructurings like those in Zambia, Sri Lanka and Ghana, faced delays because of differences among private creditors and the IMF and World Bank debt analysis.

“Too often debt sustainability analysis doesn't  provide the full picture to deal with the economic challenges that most countries face,” said Eric LeCompte, Executive Director of Jubilee USA Network. “These technical debt assessments impact all of us. The devil is in the details and current debt analysis underestimates debt crises, leads to failed recoveries or inflicts harm on the people of a country already in crisis."

The series of papers are written by experts familiar with debt sustainability. In addition to the paper from Stigltz and Guzman, other paper authors include Sherillyn Raga, Matthew Martin and Gail Hurley. These authors focused on economic shocks such as pandemics and weather events, the sustainable development and climate goals and accountability to affected populations.

“If debt analysis includes preparing for economic shocks, addressing climate changes and how people are fully impacted, we can better prevent and solve crises,” added LeCompte who serves on United Nations finance expert groups.

The IMF initiated a review of its methodology to assess debt in low-income countries. Pope Francis declared 2025 is a Jubilee year, calling for the forgiveness of unpayable debts and an international process to deal with debt crises.

Read the Debt Sustainability Assessments and their Role in the Global Financial Architecture paper series here.

Jubilee USA Network is an alliance of more than 75 US organizations and 750 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA wins critical global financial reforms and won more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org