Amid ongoing global economic recovery efforts, Kristalina Georgieva, Managing Director of the International Monetary Fund, has issued a cautionary note regarding persistent challenges such as high debt and low growth. Her remarks come as the U.S. and EU implement rate cuts to tackle inflation.

What Happened: Georgieva highlighted that despite progress, governments are increasingly reliant on borrowing, which, coupled with “anemic growth,” complicates debt management. She praised central banks for their inflation control efforts but noted uneven benefits across regions, with some still facing high prices and related unrest, CNBC reported on Friday.

“It’s not yet time to celebrate,” she said.

“When we look into the challenges ahead of us, the biggest one is low growth, high debt. This is where we can and must do better.”

Georgieva’s comments precede the 2024 annual meetings of the IMF and World Bank Group in Washington, D.C., where global economic issues will be discussed. She also pointed out that international trade is no longer the “engine of growth” it once was, citing restrictive policies and U.S.-EU tariffs against China as potential risks. Additionally, she expressed concern over geopolitical tensions, particularly in the Middle East, affecting global financial stability.

See Also: Financial Sector Hits Record Highs As Goldman Sachs, Bank of America, Citi Beat Q3 Earnings Expectations

Why It Matters: Georgieva’s comment arrived a day after the European Central Bank (ECB) cut interest rates for the third time this year to stimulate a sluggish economy, shifting focus from inflation control to economic growth. This move follows the Federal Reserve’s 50 basis point rate cut in September, marking a significant policy shift as both regions tackle economic challenges.

Meanwhile, the U.S. faces a staggering debt situation, with estimates suggesting a true national debt of $175 trillion when accounting for entitlements like Social Security and Medicare. This escalating debt underscores the urgency of addressing fiscal challenges.

In China, the government is reportedly considering issuing $850 billion in special treasury bonds to stimulate its slowing economy and manage local debt. These developments highlight the global nature of economic challenges and the varied approaches being taken to address them.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari