Debt costs squeeze development budgets
Source publication: 18 October 2026, 10:45 UTC (16:15 IST). Region: Global, with a focus on developing economies. Relevant SDGs: 1, 3, 4, 8, 10 and 17.
Developing countries left the 2026 IMF and World Bank annual meetings facing higher financing costs and limited new policy support, according to Reuters reporting from Bangkok. The analysis said the meetings ended without a specific new initiative to address the combined effects of conflict, inflation, debt pressure and unequal access to artificial-intelligence investment.
IMF Managing Director Kristalina Georgieva said average debt-service payments in developing countries had more than doubled over the past decade to 14% of government revenue. That burden reduces fiscal room for education, healthcare and other public services. The figure describes an average financing constraint; it is not a new debt-relief commitment or evidence that social expenditure has already fallen by the same proportion in every country.
World Bank Deputy Chief Economist Ayhan Kose said developing-country growth had slowed to around 3.6% from 4.4%, while the outlook for advanced economies had also weakened. He said the Bank’s mobilisation of private capital had reached three times its 2022 level. That comparison concerns capital mobilisation by the institution; it does not show that financing was evenly distributed, fully disbursed or converted into measured household outcomes.
The meetings also examined the risk that rapid AI investment could widen gaps between countries able to participate in new technology value chains and those facing high borrowing, food and energy costs. Falling official development assistance and persistent difficulty attracting foreign investment added to the concern.
Reuters’ report documents policy debate and attributed economic indicators. It does not announce a new IMF or World Bank financing package, quantified debt-relief target or completed development result. Future assessment will require country-level evidence on debt service, budget allocations, investment flows and changes in access to essential services.
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