IMF chief slams' cowardice to make 'tough political choices' on AI, national debt: 'you have the tools, now have the wisdom'

The IMF is telling governments to stop stalling. In Singapore on Wednesday, Managing Director Kristalina Georgieva said rich and poor countries alike need to move faster on debt and inequality as they face pressure from the AI boom, heavy borrowing and conflicts in the Middle East and Ukraine.

Her warning came ahead of next week’s IMF-World Bank meetings in Bangkok, where finance ministers and central bank governors from 191 member countries will meet to talk about financial stability and growth. Georgieva’s line was blunt: policymakers already have the tools, and now they need the will to use them.

Debt is becoming a bigger problem in places as different as the U.S., Japan and Germany, while poorer countries are being squeezed between public spending and loan repayments at a time of high interest rates. At the same time, the rapid buildout of data centers for artificial intelligence is helping push stock prices to record highs in many places, even as energy costs stay elevated because of the Iran war.

Georgieva said AI investment may end up being larger, relative to the economy, than spending on railroads, electricity grids and telecom networks. That sounds like progress, and in some places it is. But she also warned that the gains are uneven: China, India, Japan, South Korea, Taiwan and other tech-heavy economies are benefiting, while most countries are not. That widens the gap she is worried about.

The risk, in her telling, is that the AI boom is doing two things at once. It is boosting corporate earnings and inflation, while also creating a delay between the spending and the payoff. If those earnings disappoint, she said, heavy leverage among hyperscalers and big global holdings of U.S. stocks could turn a letdown into something much uglier. Her prescription was the usual IMF mix: tighter budgets where needed, higher borrowing costs if inflation demands it, and more regulation, worker training, flexible labor markets, entrepreneurship and energy security.