The Hormuz closure is increasing economic pressure on developing nations by pushing up inflation and borrowing costs, IMF chief Kristalina Georgieva has warned. The disruption is adding to existing global debt concerns.
Georgieva said the continued closure of the Strait of Hormuz is contributing to higher bond yields worldwide. She linked the pressure to rising inflation, elevated debt levels and uncertainty in global markets.
The IMF chief made the remarks during a G20 meeting in North Carolina, where she discussed the wider economic impact of growing debt and persistent inflation. She said the effects could extend well beyond low-income countries.
According to Georgieva, advanced economies are also facing significant debt challenges. Higher debt levels combined with stubborn inflation could increase debt servicing costs across different groups of countries.
The Hormuz closure is particularly concerning because disruptions in the strategic waterway can affect energy markets and increase costs for businesses and consumers. Higher energy-related costs can add further pressure to inflation.
Georgieva warned that emerging markets and developing economies could face greater financial strain if global borrowing costs continue to rise. Higher interest expenses could make it harder for governments to manage existing debt and fund development.
The IMF has repeatedly highlighted the need for countries to strengthen their financial positions as global economic risks increase. The Hormuz closure, persistent inflation and rising debt costs could make progress on debt sustainability more difficult for vulnerable economies.
