IMF CALLS FOR REFORMS TO BOOST GLOBAL GROWTH

MBABANE – IMF has called for urgent economic reforms to stimulate global growth, as economies face mounting challenges including high debt levels, policy uncertainty and slowing expansion.

Speaking at the first G20 Finance ministers and Central Bank Governors Meeting in Cape Town, South Africa, on February 27, 2025, the International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned that the world economy remains stuck in low growth while risks continue to diverge across different regions.

Georgieva noted that the IMF projects global economic growth at 3.3 per cent in both 2025 and 2026. While this figure indicates some stability, it remains well below historic averages.

“We see divergences widening across economies, with growth in the US stronger, while the EU experiences a more gradual pickup than previously expected,” she said. “In emerging markets and developing economies, growth in 2025 broadly matches last year’s performance.” The IMF also observed that the disinflation process continues, supported by cooling labour markets and declining energy prices. Inflation is projected to move closer to Central Bank targets over time. However, uncertainty remains high, with significant policy shifts in major economies, including the United States, the European Union and emerging markets.

Disinflation

While some upside potential exists—particularly in the US, where positive sentiment could boost economic activity—most global risks lean to the downside. Georgieva highlighted policy-induced disruptions to disinflation and capital outflows from emerging markets as some of the biggest concerns.

Debt levels remain a critical issue, with many countries facing high interest payments and refinancing needs that limit their ability to invest in crucial sectors such as education, healthcare and infrastructure. “A few countries may need to restructure their debt, while many more struggle with high repayment burdens,” she said.

The path forward: Domestic and global policy actions

1. Domestic policies to support growth
According to Georgieva, the central task for governments is to craft policies that provide a strong foundation for higher and more durable growth.

Macroeconomic and financial stability: Countries must balance short-term risks while rebuilding economic buffers.

Monetary policy: Central Banks must fully restore price stability while supporting employment and economic activity.

Fiscal reforms: Most governments need to place public debt on a sustainable path, improve revenue collection and increase efficiency in public spending.

Supply-side reforms: Governments should prioritise policies that cut red tape, increase competition and encourage entrepreneurship.

“Increasing productivity is key,” Georgieva emphasised. “Countries must strengthen education systems, implement smart regulations, and encourage responsible adoption of technologies such as artificial intelligence (AI).”

2. International cooperation to address debt and growth constraints

While domestic efforts are crucial, Georgieva stressed that no country can tackle these challenges alone. She called for:
w     More external financial support to assist governments in implementing reforms.
Better debt restructuring mechanisms, ensuring that countries struggling with repayment can resolve their financial challenges in a timely and predictable manner.

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