IMF Spring Meetings: New Language, Old Tools

If I were to summarize this year’s Spring Meetings of the International Monetary Fund in one sentence, it would be this: the Fund has become more aware of the complex nature of the global economic crisis, yet it continues to operate within the framework of old policy tools.

Perhaps this awareness is not entirely new. Since the outbreak of COVID-19 pandemic, there has been a noticeable shift in the IMF’s language. It is worth recalling that the world has not fully recovered from the economic shock triggered by COVID-19 and the inflationary pressures it generated. Nor does it appear that the long-term effects of the pandemic—an event that now seems distant—will disappear from the global economy anytime soon. The pandemic reshaped the global economic order in multiple ways and set in motion the current cycle of monetary tightening policies across both the Global North and South, policies introduced in response to the global inflation crisis, which is itself likely to intensify amid ongoing disruptions in global energy markets.

Today, against the backdrop of war in the Middle East and the instability accompanying it, the IMF appears increasingly aware of the realities of the global debt crisis and of how countries—particularly in the Global South—have become more vulnerable than ever before. Yet this awareness has not translated into new policy instruments through which the Fund can intervene.

Throughout various meetings with civil society representatives during the Spring Meetings, IMF officials appeared primarily concerned with defending traditional tools, especially monetary interventions tied to the Fund’s mandate and conditionality framework. These tools continue to rely on fiscal austerity and capital account liberalization, including a strong emphasis on exchange rate flexibility. However, such conditionalities continue to overlook the complex realities of debt, particularly in the Arab region, which is currently suffering direct economic consequences from the war in the Middle East.

In Egypt, the largest Arab borrower from the IMF, the war had an immediate impact on the economy. The Egyptian pound depreciated sharply following the flight of “hot money” capital flows—a form of financing whose negative consequences the IMF appears insufficiently concerned with, especially in today’s geopolitically volatile environment. Such volatility inevitably produces greater fluctuations in speculative capital inflows and outflows, placing additional pressure on exchange rates.

The IMF’s World Economic Outlook, released on the second day of the meetings, painted a bleak picture of current economic disruptions caused by the war. The Fund described the war as a major shock to the global economy that forced it to revise its growth projections, which had previously anticipated lower inflation rates prior to the conflict. That trajectory was completely reversed due to rising energy prices and their expected impact on global inflation.

The IMF lowered its global growth forecast to 3.1%, while projecting inflation to rise to 4.4% annually. The Fund explicitly linked these projections to the duration of the war and the damage inflicted on energy infrastructure in the region. Despite the ceasefire, these effects remain present, and many shipping vessels are still unable to safely transit through the Strait of Hormuz.

The outlook appears even more severe in the Middle East, which the IMF describes as the region most heavily affected by the current war. The Fund reduced its growth projections for the Middle East and Central Asia region from 3.6% in 2025 to 2.9% in 2026. Among the most affected are the oil-producing Gulf states, due to damage to energy export infrastructure as well as disruptions to maritime traffic through the Strait of Hormuz, through which nearly one-fifth of global oil supplies and a quarter of internationally traded gas pass.

Tourism revenues also represent a significant source of pressure, as rising aviation fuel prices are expected to affect air travel costs. Moreover, current disruptions are likely to impact food prices as well, even if these effects have not yet fully materialized. Damage to natural gas infrastructure and fertilizer production—which heavily depend on Gulf energy exports—will inevitably contribute to higher global food costs.

For commodity-importing countries in the Middle East and North Africa, the IMF highlighted the dual impact of rising energy and food prices. The severity of these effects will vary depending on each country’s level of dependence on imported food and energy supplies.

Nevertheless, the IMF’s reading of the war in the Middle East remains deeply limited. The Fund treats the war primarily as an external geopolitical shock affecting growth and inflation, while overlooking its deeper structural implications, particularly within already fragile economic systems.

The war has struck economies already burdened by high debt repayments, shrinking fiscal space, heavy import dependence, and volatile international financing. The real danger, therefore, lies not only in declining growth rates, but in these shocks becoming a justification for further pressure on social spending.

In Egypt, for example, the government moved quickly after the outbreak of the war to raise fuel prices by between 14% and 17%, followed later by increases in electricity prices. In Jordan, fuel prices rose by around 11% in early April, while in Morocco fuel prices increased by approximately 13% during the same period.

The war is therefore driving further austerity measures across the region, especially in countries already burdened by high debt servicing costs and IMF programs. The IMF still appears to define “stability” primarily as the ability to absorb shocks without undermining debt repayment priorities and fiscal discipline within government budgets.

In this sense, the Fund’s reading of the economic consequences of the war remains partial. It focuses on macroeconomic indicators while paying limited attention to how the burdens of these economic shocks are distributed within societies, or how crisis-management policies may deepen vulnerability by increasing dependence on borrowing—one of the root causes of economic fragility in many countries across the region.

Debt issues featured prominently throughout the meetings. The program included numerous discussions and sessions on debt at multiple levels, ranging from legislative oversight and debt transparency to redefining debt sustainability in developing countries. This concern is not new; since COVID-19, both the IMF and the World Bank Group have repeatedly warned about rising debt levels across the Global South.

Yet despite this recognition of the global debt crisis, both institutions continue to operate within the same old frameworks, reproducing narratives of debt sustainability narrowly centered on repayment capacity. Many defend this approach as the only way for countries to maintain access to international debt markets and continue borrowing.

What remains excluded from this understanding of sustainability are far more important questions: How much domestic spending must be sacrificed to make debt repayment possible? Under such frameworks, debt reproduces an economic model in which debt servicing takes precedence over social protection, public investment, and green transition policies.

In this sense, the IMF’s current frameworks do not truly measure debt sustainability as much as they measure societies’ capacity to endure additional pressure. This is precisely where the political and social dimensions of the crisis disappear. When public budgets are compressed to free more resources for creditors, the burden of debt does not vanish—it is redistributed internally through inflation, declining public services, price increases, and the erosion of real incomes.

The central critique of the IMF, therefore, is not merely its slow response, but the fact that it continues to treat debt as a technical financial issue solvable through discipline, rather than as an international power relationship that reproduces dependency and perpetuates vulnerability in Global South economies.

For this reason, this year’s Spring Meetings were not merely an occasion for exchanging economic forecasts; they represented a moment that exposed the limits of prevailing thinking within international financial institutions. The IMF today appears more capable of describing the world as it is: a world shaped by war, debt, inflation, and highly volatile finance.

Yet it remains far less willing to acknowledge that managing this world through the same old tools is no longer possible without immense social and political costs. As the gap between diagnosis and remedy continues to widen, one question remains unresolved: can the IMF truly reconsider the meaning of stability and sustainability, or will it merely continue updating its language while leaving its old prescriptions fundamentally unchanged?