The head of the IMF has revealed that worries about a crisis in the private credit market keeps her awake at night, sometimes.Kristalina Georgieva was asked at today’s press briefing whether she is concerned about the health of the private credit markets, following the collapse of US auto parts supplier First Brands and car dealership Tricolor in recent weeks.Those failures prompted the boss of JP Morgan, Jamie Dimon, to warn this week that more “cockroaches” could emerge from the private credit sector.Q: Is this a concern for you about the health of the credit market – could it boil over into a crisis? How prepared is the world to cope with another crisis?Georgieva replies that the IMF is “concerned”, which it made clear in the financial stability report it issued this week.She says there has been a “very significant shift of financing” from the banking sector to non-bank financial institutions, to a point where more than half of financing is now there.

Those non-bank financial institutions do not enjoy the same level of regulatory oversight as the banks do, creating a risk of ending up in “a difficult place” if the sector grows significantly,The scale of any problem depends on two things, she continues:1) the performance of the real economy2) “the magnitude of non-banking financial institutions that find themselves in a tough spot”,Georgieva declares:This is why we are urging more attention to the non-bank financial institutions,We are asking the question, what should be done to have more oversight and a better view of what is happening there,You are asking the question that keeps me awake every so often at night.

Georgieva insists, though, tht the world is not in the situation it faced at the start of the global financial crisis – there are better policy frameworks across the globe, and systemically significant economies have accumulated massive reserves to cope with problems.But, she cautions that countries have exhausted their fiscal buffers, while central banks are still battling inflation.She adds, though, that there aren’t many ‘cockroaches’ scurrying around yet, telling reporters:In this environment, of course, the security blanket is covering us, but maybe we have a foot out in the cold.We have to be vigilant.What do we do? We watch it very carefully.

Stretched valuations are a reality,AI has created this enthusiasm,If this bet pays off we are in a very good place, but what if it doesn’t or if it doesn’t fast enough?You are right to be putting this question to us,I can tell you that we are very watchful on developments,So far, so far, not that many cockroaches.

Time to wrap up…The head of the IMF has revealed that worries about a crisis in the private credit market keeps her awake at night, and called for more vigilance of the sector.UK chancellor Rachel Reeves has told reporters that “those with the broadest shoulders should pay their fair share of taxes,” in a new hint that some taxes will rise in next month’s budget.Reeves also said she would like more headroom to keep within her fiscal rules, but pointed out that “that comes with trade-offs.”The UK economy has returned to growth, with a 0.1% rise in GDP in August.

Unimpressed economists said the increase was ‘meagre’, and showed the economy was stumbling ahead of the budget.Nestle has announced plans to cut 16,000 jobs.Chancellor Rachel Reeves also told reporters today that the UK wants to see more investment in the country by pharmaceutical companies if it agrees to pay higher drug prices as part of tariff talks with the United States.Reeves explained that the government was working “very closely” with the pharmaceutical industry and the United States in relation to talks to secure lower tariffs for the sector, but acknowledged their businesses’ concerns about the low prices paid for drugs by Britain’s public health service and other issues.She said:“We do need to make sure that we are an attractive place for pharmaceuticals, and that includes on pricing, but in return for that, we want to see more investment flow to Britain.

“We’ve been very successful with the U,S,in terms of negotiating lower tariffs,,.

and of course, we want that to be the case with pharmaceuticals as well.But we are in the middle of those negotiations at the moment.”Drug pricing has become a hot topic in recent weeks as major pharmaceutical companies ditched or paused almost £2bn in planned UK investments, amid claims that the British government was not spending enough on new medicines.News is being committed across the IMF’s annual meeting today.Bank of England rate-setter Catherine Mann has warned there is “very clear upside evidence” that UK inflation could remain above the central bank’s 2% target for longer.

Mann, a member of the Bank’s monetary policy committee, said monetary policy needs to remain tight to rein in climbing household inflation expectations that threaten to keep price pressures elevated if they spill over into demands for higher pay.“There is downside risk,” she told an Institute of International Finance event in Washington, pointing to “modest” growth at best and a softening labor market.However, she added:“There is very clear upside evidence of inflation being above target, staying sustained above target.”Bloomberg has more details, here.International Monetary Fund managing director Kristalina Georgieva has called for the Gaza ceasefire to be maintained, as a lasting peace would benefit the entire region.

Georgieva told reporters she was relieved when the recent ceasefire was reached for the sake of all the people affected by the two-year war in the Palestinian enclave.She said lowered tensions would be good news for the economies of Egypt and Jordan, where the IMF has programs, and Lebanon and Syria, which have asked for help and support from the global lender.She explains:“It is important because everybody concerned encourages this direction of sustaining a lasting peace, and yes, it would benefit the region.There will be a peace dividend for everybody.”Georgieva said the IMF was working with Lebanon, which has asked for a loan program.

“I hope we will be able to come up with a program,” she said,The head of the IMF has revealed that worries about a crisis in the private credit market keeps her awake at night, sometimes,Kristalina Georgieva was asked at today’s press briefing whether she is concerned about the health of the private credit markets, following the collapse of US auto parts supplier First Brands and car dealership Tricolor in recent weeks,Those failures prompted the boss of JP Morgan, Jamie Dimon, to warn this week that more “cockroaches” could emerge from the private credit sector,Q: Is this a concern for you about the health of the credit market – could it boil over into a crisis? How prepared is the world to cope with another crisis?Georgieva replies that the IMF is “concerned”, which it made clear in the financial stability report it issued this week.

She says there has been a “very significant shift of financing” from the banking sector to non-bank financial institutions, to a point where more than half of financing is now there.Those non-bank financial institutions do not enjoy the same level of regulatory oversight as the banks do, creating a risk of ending up in “a difficult place” if the sector grows significantly.The scale of any problem depends on two things, she continues:1) the performance of the real economy2) “the magnitude of non-banking financial institutions that find themselves in a tough spot”.Georgieva declares:This is why we are urging more attention to the non-bank financial institutions.We are asking the question, what should be done to have more oversight and a better view of what is happening there.

You are asking the question that keeps me awake every so often at night,Georgieva insists, though, tht the world is not in the situation it faced at the start of the global financial crisis – there are better policy frameworks across the globe, and systemically significant economies have accumulated massive reserves to cope with problems,But, she cautions that countries have exhausted their fiscal buffers, while central banks are still battling inflation,She adds, though, that there aren’t many ‘cockroaches’ scurrying around yet, telling reporters:In this environment, of course, the security blanket is covering us, but maybe we have a foot out in the cold,We have to be vigilant.

What do we do? We watch it very carefully.Stretched valuations are a reality.AI has created this enthusiasm.If this bet pays off we are in a very good place, but what if it doesn’t or if it doesn’t fast enough?You are right to be putting this question to us.I can tell you that we are very watchful on developments.

So far, so far, not that many cockroaches,Asked about the situation in Senegal, Kristalina Georgieva says she gives “full credit” to the Senegalise authorities for recognising that government debt levels had been misreported (by billions of dollars)“Debt was hidden, and they bought it to light,” she explains,Georgieva adds that she had a very constructive discussion with Senegal at the IMF, and is pleased that there is now clarity about the issue,Asked about China’s economy, Kristalina Georgieva says China is still expected to grow faster than the global average,She then says China faces “a fork in the road” – whether to continue with its old, export-oriented growth model, or focus to a more domestic-consumption driven economy.

That means China must do three thingsResolve problems in its real estate sector, which are hurting consumer confidenceincrease social safety nets, by redirecting money being used to subsidise industryopen up markets that are less-open today, such as services, education and healthcareQ: How does the IMF view the fiscal health of the G7? And how about Canada specifically?IMF managing director Kristalina Georgieva says the build-up of debt is being driven primarily by advanced economies, and by emerging markets (so not low-income countries as it’s hard for them to tap more borrowing).Some of those advanced economies have more fiscal problems than others, she says.In one corner, we have the US, France, Italy, and Japan where there is need for fiscal consolidation, she explains, adding;“The good news is that they all recognise this need.”[however, France for example has faced massive political challenges in doing this…]On the other side, there are countries who are in a better position – Germany and Canada.says Georgieva, adding:“Both Germany and Canada recognise that in this very testing time they need to use their fiscal space.

”She says that in the case of Germany, this extra spending is beneficial for Germany and the E union and the rest of the world.She also says the IMF very much welcomes the changes Canada is making, followinng the changes in their relationship with the US, including modernising the budget framework to split operating expenditive from investment.[Alas, Georgieva doesn’t say which bucket the UK falls into….]Kristalina Georgieva then asks those at today’s press briefing who use AI tools to raise their hands – and most of the attendees do!IMF managing director Kristalina Georgieva is now taking questions:Q: How big a role is the AI investment boom playing in the resilience of the global economy?“Excellent question”, replies Georgieva approvingly.She says the AI investment boom is bringing “incredibly optimism”, mainly concentrated in the US.

Bu, she says, there are two things AI needs to work,First: energy, where AI’s demand is equivalent of half the energy consumption of the US,Second: How will AI transform the rest of the economy? It will only be valuable if it makes a major contribution to productivity and growth, Georgieva says,She adds:We have done our assessment,Or view at this point is that AI will indeed contribute to growth, somewhere beween 0.

1% and 0.8%This is significant, Georgieva insists, as global growth is currently stuck at around 3%.If AI can contribute that extra growth it would be “very significant for the world”.But… the IMF is urging members to prepare for this AI revolution.Georgieva warns:The risk we see is that we may end up in a world where there is increased productivity, but it is also a source of divergence within countries and across countries.

Preparedness really matters.It is happening fast, so we don’t really have much time as societies to be ready for AI.IMF chief Kristalina Georgieva then explains that the main priority is to guard against financial instability.She says that countries with excessive surpluses like China should boost domestic demand, including by spending less on industrial policy and more on social safety nets.At the other end of the ledger, countries with excessive deficits such as the US need to reduce fiscal deficits and incentivize private savings.

People are anxious, they are taking to the streets to demand better opportunities, IMF chief Kristalina Georgieva points out.She says the IMF is urging its members to keep trade as an engine of growth.In the halls of the IMF’s headquarters, managing director Kristalina Georgieva is holding a briefing with the press now.Georgieva begins by reminding journalists that when policymakers gathered in Washington DC six months ago there was “a lot of anxiety about the state of the global economy”.Then, the IMF was forecasting a sharp slowdown (but not a recession).

Six months on where do we stand?“Better then feared, but worse than needed,” Georgieva says,“Uncertainty has continued to go up, up, up” she warns, pointing towards the ceiling to emphasise the point,But despite this, global growth has held “fairly steady”,Growth is projected to slow from 3,3% last year to 3.

2% this year and 3.1% in 2026.Georgieva says:“That’s better than we feared, and better than we projected six months ago.”She says there are two reasons.First, “improved policy fundamentals”.

Since the financial crisis, many economies especially emerging markets have pursued sound policies, and strengthened their institutions and frameworks, Georgieva explains,“This investment is paying off – and if I may say, stay the course,Seconly, the private sector has shown “quite remarkable” agility in coping with challenges, such as in supply chain flexibility and front-loading imports to protect themselves from trade wars,Overall, Georgieva cautions that “the outlook is underwhelming”,Medium-term growth prospect remain weak, public debt near record highs and continues to climb, and the global economy is excessively imbalanced, she explains