The International Monetary Fund’s chief urged nations with high levels of dollar-denominated debt to try to extend maturities now to lessen pressure as the U.S. Federal Reserve raises interest rates.
Managing Director Kristalina Georgieva said that her worry is greatest for low-income countries because 60% are in debt distress or in danger of reaching that point. She predicted a more difficult year ahead for policymakers based on the differences between nations and the nuance of the solutions required, and that 2022 will be like "navigating an obstacle course.”
"Our message to countries with high levels of dollar-denominated debt is ‘act now,’” Georgieva said on Friday during a virtual panel at the World Economic Forum, alongside European Central Bank President Christine Lagarde and Bank of Japan Gov. Haruhiko Kuroda. "If you can extend maturities, please do it. If you have currency mismatches, now is the moment to address them.”