Business & Finance

Global Finance Leaders Convene in Bangkok Amid Middle East Conflict and Rising Debt

By Reuters

Finance officials from around the world will gather in Bangkok this week for the annual meetings of the International Monetary Fund (IMF) and World Bank, held outside Washington for the first time in three years. The agenda will be dominated by the US‑Israel war on Iran, now in its eighth month, and its inflationary impact, according to IMF Managing Director Kristalina Georgieva. She told Reuters that 18,000 people are registered to attend, 4,000 more than the last off‑site meetings in Morocco in October 2023.

United States Treasury Secretary Scott Bessent will not attend; he sent two senior officials in his place while he handles “domestic engagements,” a US official said. Federal Reserve Board Chairman Kevin Warsh will attend and is scheduled to speak with Georgieva on October 16. Several other finance ministers are staying home due to domestic budget and election duties, but most central bankers will be present, Georgieva added.

Bessent’s absence may frustrate counterparts amid rising tensions over the Iran war, Ukraine’s battle against Russia’s invasion, and the US move to impose sanctions on the International Criminal Court.

The Group of Seven (G7) has agreed to release 100 million barrels of diesel and crude oil from emergency reserves under pressure from President Donald Trump, who wants lower petrol prices before the November elections. Trump announced a deal with Russia that would provide more diesel to global markets and a temporary waiver of US sanctions designed to deprive Moscow of revenues for its war on Ukraine. Ukrainian President Volodymyr Zelenskyy criticized the move.

Since the war began on February 28, more than one billion barrels of oil have been released, mainly from onshore commercial inventories. Industry executives say the amount of oil in storage that is accessible to the global market is running low, making the market more fragile and fuelling pressure on prices.

The IMF has signalled little change in its forecast for three percent global growth in 2026 and may edge its forecast for next year slightly higher. Some countries will see downgrades, including Ukraine, now in its fifth year of war against Russia’s invasion, and Gulf countries hit by Iranian strikes and sharply reduced energy exports.

IMF research released on Tuesday showed that sharp spikes in food and energy prices are an increasingly common source of crises that drive inflation expectations higher for longer, worsen poverty and threaten economic stability.

A growing public debt burden is sapping growth and adding inflationary pressures. The IMF says public debt is at the highest level since World War II and will exceed 100 percent of gross domestic product (GDP) before 2030. Advanced economies, led by the US, have the highest debt‑to‑GDP ratios, but emerging markets and low‑income countries are particularly vulnerable, given capital outflows in search of higher US rates, weather extremes triggered by the El Niño climate phenomenon, and a lack of investment in artificial intelligence (AI), which has mitigated negative supply shocks in the US and other rich countries.

Developing countries face $400 bn in debt payments to external creditors in 2026, and interest payments already exceed 10 percent of revenue on average. Many lower‑income countries are worried about new IMF recommendations for loan programmes that call for fewer but deeper reforms as a condition for approving lending, a change that many fear will lead to painful austerity measures.