Speaking ahead of the meetings to be held by the IMF and World Bank member countries in Bangkok, Thailand next week, Kristalina Georgieva, the IMF MD, urged both poor and rich countries to curb their debt, regulate AI and combat growing inequalities at a time when the world is grappling with a triple-sided blow from war-related shocks, the AI boom and heavy borrowing.
In a speech delivered on Wednesday, the IMF chief indicated that leaders around the world are faced with the need to make tough political choices and that the necessary decisions on policy should be made without further delay. She added that tools were available and that what remained to be put to use is the appropriate wisdom to utilize those tools.
The meetings are expected to be attended by officials from 191 countries that are member states of the IMF and the World Bank. Those officials include governors of central banks and finance ministers.
During the meetings, the global economy will be assessed and discussions will be held on which strategies can be leveraged to ensure financial systems remain stable and economies continue to grow. Georgieva noted that so far, the biggest hit to the well-being of the globe has come from conflicts in the Middle East and Ukraine.
Speaking about AI, the IMF chief said risks have arisen from the rapid push to build data centers so that AI can have the compute power needed for its systems to work. She said that the lag between heavy investment in AI and the actualization of the technology’s benefits puts the global economy on precarious footing because firms with high valuations could struggle if investment results don’t match expectations.
If that happened, the ripple effects could deliver a huge blow to the global economy and the countries with the highest exposure to the AI boom could take the hardest hits.
Georgieva pointed out that many developed countries, such as the U.S., China, Taiwan, South Korea, Japan and several others are benefiting from the current AI boom. However, poorer countries are being left behind and that is fueling a rise in inequality.
She called on countries around the world to reduce their public spending and also raise interest rates to put a lid on growing inflation. These measures, she says, should be implemented in ways that shield vulnerable people from the effects of the policy decisions made.
It remains to be seen what AI hyperscalers like Microsoft Corp. (NASDAQ: MSFT) think are the best ways to address some of the concerns expressed by the managing director of the IMF on matters like the energy use of AI and the emerging inequalities regarding access to this advanced technology.
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