THE INTERNATIONAL Monetary Fund (IMF) concluded the third meeting of the G20 Finance Ministers and Central Bank Governors in KwaZulu-Natal, South Africa, with a call for a coordinated action to address persistent economic uncertainties and foster sustainable growth.
IMF’s First Deputy Managing Director, Gita Gopinath Gopinath, in a statement on Friday at the end of the meeting, noted that while the global economy has shown resilience, growth remains subdued compared to historical trends.
The IMF’s April World Economic Outlook projected global growth at 2.8% in 2025 and 3.0% in 2026 — below the historical average of 3.7%. Major economies, including the U.S. and China, faced downgrades due to policy uncertainty, trade tensions, and weaker demand.
The statement noted that inflation is expected to decline gradually, reaching 4.3% in 2025 and 3.6% in 2026, though progress varies across countries. Recent economic indicators reflect mixed trends, including trade diversion ahead of tariff hikes and improved financial conditions following select trade agreements. However, downside risks persist, and the IMF will release an updated forecast later in July.
Policy Priorities: Strengthening Resilience and Growth
Gopinath emphasised the need for policymakers to address trade tensions, restore fiscal buffers, and ensure debt sustainability.
She highlighted the importance of Monetary Policy Calibration demanding that Central banks must tailor policies to domestic conditions while maintaining independence and clear communication.
The statement also called for Structural Reforms to boost productivity, job creation, and technological adoption to counter demographic challenges, while also urging governments to strengthen public finance by enhancing revenue mobilisation, particularly in low-income countries, which could raise an additional 7% of GDP by realising their tax potential.
The IMF stated that it is supporting these efforts through tax reforms, improved public spending efficiency, and governance diagnostics.
Debt and Capital Flow Challenges
Despite resilient capital flows to emerging markets, financing conditions remain tight for many borrowers, Gopinath stated, stressing the need for domestic reforms to attract investment while acknowledging that some countries with sustainable but high debt burdens may require transitional support.
For nations facing unsustainable debt, proactive restructuring is critical, the IMF said as it welcomed progress in debt resolution mechanisms, including the Global Sovereign Debt Roundtable’s “Restructuring Playbook” and the G20’s Common Framework guidelines.
Gopinath, however, urged further improvements to cover middle-income countries and enhance predictability.
Financial Stability Risks and Africa’s Growth Potential
While noting that financial conditions have eased since April, Gopinath warned of lingering risks, including stretched asset valuations, high leverage, and fiscal deficits straining bond markets. She called for continued vigilance in financial supervision, particularly for non-bank financial institutions (NBFIs), which now represent over 50% of the financial sector.
The IMF also endorsed South Africa’s focus on unlocking Africa’s economic potential through reforms, investment, and international support. Gopinath emphasized the continent’s demographic and resource advantages, urging concessional financing and capacity-building to address debt vulnerabilities.
Gopinath thanked South Africa for hosting the G20 meeting and reiterated the IMF’s commitment to supporting global economic stability and inclusive growth.
