The International Monetary Fund (IMF) has warned that rising debt and higher bond yields in advanced economies could put pressure on emerging markets and low-income countries, increasing their borrowing costs and debt repayment burdens. IMF Managing Director Kristalina Georgieva, speaking on the sidelines of the G20 meeting in North Carolina, USA, said that factors driving up global bond yields include overall debt levels, inflationary pressures from the Strait of Hormuz issue, and capital demand from AI investments. The yield on 30-year U.S. government bonds has risen to near its highest level in almost 20 years. The IMF estimated in 2022 that about 60% of low-income countries were in debt distress or at high risk, but the situation improved following strong fiscal policies. However, the IMF is concerned that progress could be undermined if bond yields remain persistently high, even though debt markets are still functioning orderly and the G20 has cooperated to improve the Common Framework to accelerate debt restructuring.
IMF warns rising global bond yields increase debt costs for developing nations, implying sustained high yields.
