Kristalina Georgieva: Depletion of global state budgets threatens financial support for Ukraine

Risks to Kyiv's financing amid global challenges

The International Monetary Fund warns that the global economy, despite its current resilience, is gradually losing the resources needed to withstand further external shocks. Governments in most countries have nearly exhausted their fiscal capacity, while energy reserves are shrinking. Moreover, persistent inflation is observed in many states, preventing prices from falling. For Ukraine, which is currently actively seeking sources of additional financing for 2027, the deterioration of partners' financial condition could become a serious obstacle.

IMF Managing Director Kristalina Georgieva spoke about these challenges during the organisation's annual meetings, which took place in Bangkok.

Two opposing forces influence growth

According to Georgieva, two opposing factors are currently affecting economic growth rates. On the one hand, the energy shock caused by military actions in the Middle East acts as a brake. On the other hand, the rapid growth in demand for artificial intelligence technologies serves as a boost for development.

Countries deeply integrated into AI technology supply chains, particularly many Asian states, are in the best position in this situation. Energy exporters that have not been directly affected by conflicts also feel secure. Conversely, poor countries and states engulfed in wars suffer the most, especially those dependent on energy imports or left on the sidelines of the technological boom.

Call for fiscal discipline and protection of people

Kristalina Georgieva addressed politicians with an urgent call to restore order in public finances before problems become critical. She emphasised that governments need to increase revenues, rationalise spending, and improve the management of public finances.

«Захищати людей, а не ціни» ("Protect people, not prices"), the IMF head underlined, adding that despite rising prices for energy and food, this principle must remain a priority. In her view, a cautious, stricter course may be appropriate in many countries today.

Context: energy crisis and forecast for Ukraine

The IMF and World Bank meetings are taking place against the backdrop of serious problems with energy supply. The war between the US and Israel against Iran has been ongoing for eight months, as a result of which Iran has almost blocked the route through which approximately 20% of global oil supplies were transported.

Against this backdrop, the IMF has already revised its forecast for Ukraine's economic development downwards. According to the fund's estimates, the country's GDP will grow by only 1% this year, whereas last year the figure was 1.8%. GDP will grow by 3.5% next year.