The 2025 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group underscored that uncertainty has become the defining feature of the global economy. Despite widespread recognition that high debt is constraining development, official outcomes fell short of meaningful reform. Yet behind closed doors, the conversation on debt appears to be shifting — from acknowledgment toward the need for real structural change.
By Sarah Ribbert (Project Coordinator)
Dear Reader,
The 2025 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group unfolded against a backdrop of heightened uncertainty in the global economy. While recent data suggest that the world has shown resilience, this stability has not yet been fully tested, and future shocks — from climate disruptions to trade tensions — remain inevitable. As IMF Managing Director Kristalina Georgieva emphasized in her keynote remarks at the CSO Townhall that uncertainty is the new normal. “Growth is slow, debt is high, and the risks of financial downturn are prominent. High levels of debt suffocate economies,” she noted, adding that while debt levels in low-income countries are declining, this is largely because those countries lack access to finance, whereas debt in emerging and industrial economies continues to rise.
Economic and Fiscal Outlook
The IMF’s latest Fiscal Monitor and World Economic Outlook outlined a global economy that is performing better than feared when IMF and World Bank members last met in April, but still faces major headwinds. Inflation remains elevated, interest rates high, and geopolitical tensions persistent. Debt vulnerabilities are widespread: countries face high financing costs, outflows of private capital, and fiscal buffers remain depleted after years of pandemic-related spending.
IMF officials underscored that countries under fiscal stress must have access to more timely, predictable, and affordable debt restructuring mechanisms. Without them, the combination of high debt service and declining aid could fuel social unrest and deepen fragility. Recent studies by the DRGR Project examined debt dynamics in, Latin America and the Caribbean, Africa and Asia and the Pacific confirm that debt service ratios remain elevated, constraining fiscal space for climate and development investment.
In a separate appeal, Georgieva also urged member governments to replenish the Catastrophe Containment and Relief Trust (CCRT), which provides grants to help low-income countries meet debt service payments during natural disasters and public-health crises. “Our ambition must be to remain able to assist our poorest members when they face situations beyond their control,” she said, stressing that even modest contributions could make a decisive difference.
Calls for Meaningful Debt Reform
Ahead of the Meetings, economists and civil society organizations reiterated demands for comprehensive debt reform. A letter by leading economists published in The Guardian called upon finance ministers and central bank governors for immediate, meaningful debt relief to prevent new crises and restore fiscal space for critical investment.
In parallel, Reuters reported on a letter signed by 165 civil-society organizations from around the world urging South African President Cyril Ramaphosa to use his G20 presidency to push for more ambitious debt reform. African policymakers echoed this demand: in The Economist, Djibouti’s Finance Minister Ilyas Moussa Dawaleh argued that Africa needs a new debt deal that addresses its uniquely high costs of debt.
Official Communiqués: Concern without Structural Reform
Despite these strong calls for reform, the official outcomes remained limited. The Intergovernmental Group of Twenty-Four (G24) statement reaffirmed support for “improving the implementation of the Common Framework to achieve more predictable, timely, and coordinated outcomes with full creditor participation,” but did not ask for new instruments or systemic reforms.
The G20 Finance Ministers and Central Bank Governors communiqué — the first dedicated statement on debt since 2020 — acknowledged that unsustainable debt undermines inclusive growth and development and identified debt vulnerabilities as a priority. However, it offered no major shifts beyond existing G20 positions on the Common Framework. Similarly, the Global Sovereign Debt Roundtable’s fifth Co-Chairs report recognized rising debt-service burdens which crowd out the space available for development spending such as education, health, and infrastructure but stopped short of recommending structural reform.
In sum, the communiqués reflect growing concern about the consequences of high debt service but not yet a shared narrative that this represents a systemic challenge requiring deep structural change. Nonetheless, in bilateral and closed-door meetings, officials increasingly acknowledged that countries are defaulting on their development — a recognition that may shape future policy debates.
Insights from Side Events
Side events organized by the Heinrich Böll Foundation, the Centre for Sustainable Finance at SOAS, University of London and the Atlantic Council offered an alternative vision for tackling debt and climate challenges. During “Sovereign Debt, the Climate Challenge, and Geoeconomics: Pathways for a Sustainable Global Response,” H.E. Hailemariam Desalegn Boshe, former Prime-Minister of Ethiopia and member of the African Leaders Debt Relief Initiative stressed that improving debt sustainability is a shared responsibility. Developing economies must strengthen fiscal management, enhance tax collection, ensure transparency, and curb illicit financial flows — but these domestic actions must be complemented by international support that help to deal with the increasing number of external stocks. According to him, debt relief and climate-responsive finance are indispensable to macroeconomic stability.
In a roundtable on a similar topic, participants agreed that the common narrative portraying developing economies as “over-indebted” misses the point. Many have too little productive debt that supports growth and investment. Here a two-track approach will be needed: comprehensive debt restructuring with full creditor participation and concessional finance for debt-distressed countries, combined with expanded concessional lending, targeted Special Drawing Rights reallocations, and climate-linked instruments — such as green bonds, debt-for-climate swaps, and disaster clauses — for solvent but liquidity-constrained economies. These tools can ease borrowing costs and expand fiscal breathing space before crises erupt.
Looking Ahead
The 2025 Annual Meetings underscored that the global conversation on debt has entered a more cautious but increasingly self-aware phase. While official statements have not yet adopted the narrative that debt service pressures are leading to “defaults on development,” and that this cannot be addressed by only domestic reforms, this concern is gaining traction behind the scenes. The challenge now is to move from recognition to reform — translating awareness into coordinated, structural action.
With South Africa’s G20 presidency and renewed engagement from international institutions, 2026 could provide the opportunity to begin reshaping the global debt architecture. For now, the world’s poorest and most vulnerable economies continue to wait for the meaningful relief and policy innovation that would enable them to invest in their people and the planet.
Thanks for reading, and until next time.
Drop us a line with your thoughts: ribbert@boell.de