## DEVELOPMENT COMMITTEE: THE MANAGING DIRECTOR'S WRITTEN STATEMENT April 2026 ## Source details **Canonical URL:** [DEVELOPMENT COMMITTEE: THE MANAGING DIRECTOR'S WRITTEN STATEMENT April 2026](https://www.imf.org/-/media/files/publications/pp/2026/english/ppea2026010.pdf) ## Other formats - [Markdown version](/-/media/files/publications/pp/2026/english/ppea2026010.pdf.md) - [Structured JSON version](/-/media/files/publications/pp/2026/english/ppea2026010.pdf.json) --- ### Economic outlook and risks - Global outlook under the reference forecast (disruptions fade by mid-2026): - Global growth: 3.1 percent in 2026 and 3.2 percent in 2027; below recent pace of about 3.4 percent in 2024–25. - Forecast revision: down by 0.2 percentage point for 2026 relative to the January 2026 WEO; 2027 forecast unchanged. - Advanced Economies (AEs): - Growth: 1.8 percent in 2026 and 1.7 percent in 2027, compared with 1.9 percent in 2025. - Large negative effects expected in some net energy‑importing economies (e.g., the euro area and the United Kingdom). - Emerging Market and Developing Economies (EMDEs): - Growth: from 4.4 percent in 2025 to 3.9 percent in 2026 and 4.2 percent in 2027. - Regional projections: - Middle East and Central Asia: from 3.6 percent in 2025 to 1.9 percent in 2026, then 4.6 percent in 2027. - Emerging and developing Asia: from 5.5 percent in 2025 to 4.9 percent in 2026. - Sub‑Saharan Africa: from 4.5 percent in 2025 to 4.3 percent in 2026. - Latin America and the Caribbean: broadly stable at 2.3 percent in 2026 and pick up to 2.7 percent in 2027. - Emerging and developing Europe: sharp slowdown in 2025 to 2.0 percent expected to reverse modestly to around 2.1 percent in 2027. - Low‑Income and Developing Countries (LIDCs): - Growth revised downward by 0.3 percentage points to 4.8 percent in 2026 and 4.9 percent in 2027. - Disproportionate risks if reliant on imported food and fuel, with risks from weaker remittances (notably from GCC links), fertilizer supply disruptions, high debt service burdens, tightening external financing, increased domestic borrowing, and inadequate foreign exchange reserves. - Medium‑term prospects: - World output projected to expand at an average annual rate of 3.1 percent in 2028-31, below the pre‑pandemic (2000–19) average of 3.7 percent. - Slower growth reflects China's slowdown, slower growth in other regions, geoeconomic fragmentation, and demographic pressures. - Inflation: - Global headline inflation projected to rise to 4.4 percent in 2026 before declining to 3.7 percent in 2027 (a 0.7 percentage point revision relative to October 2025). - Inflation revisions larger for EMDEs than for AEs, driven by higher energy and food prices and exchange rate depreciation. - Severe scenario: - Global growth cut to only about 2 percent in 2026. - Headline inflation could rise just above 6 percent by 2027. - Effects on EMDEs nearly twice as large as on AEs. - Downside risks dominate: - Risks listed: protracted conflict in the Middle East; worsening geopolitical tensions; trade disputes; reevaluation of AI profit expectations leading to investment declines; abrupt financial market corrections; larger fiscal deficits and rising public debt; erosion of institutions and monetary policy credibility. - Limited upside risks: progress in trade talks; greater policy predictability; stronger AI‑driven productivity gains; renewed structural reform momentum. ### Policy priorities and recommendations - General priorities: - Strong fundamentals and policy agility; credible policy frameworks; strong institutions; dynamic private sectors; agile policymaking to improve shock resilience. - Policymakers face tradeoffs: price stability vs. growth; restraint vs. stimulus; risk management vs. innovation; fiscal strength vs. jobs and cohesion. - Monetary policy: - Central banks should remain vigilant, prepared to act decisively in line with their mandates, and guard against supply shocks destabilizing medium‑to‑long‑term inflation expectations. - Where shocks are transitory and monetary policy is properly calibrated, policymakers may “look through” negative supply shocks. - Transparent communication and strong central bank independence are critical. - Temporary foreign exchange intervention and capital flow management measures may be warranted where imminent risk of excessive or disorderly exchange rate movements emerges, provided they support appropriate monetary and fiscal stances. - Financial sector policies: - Strengthen banking supervision and regulation, enhance systemic risk monitoring, and tighten oversight of non‑bank financial intermediaries where leverage, liquidity mismatches, or links to banks have increased. - Strengthen capital and liquidity requirements at weaker institutions in line with internationally agreed standards, and be ready to support market functioning if liquidity strains emerge. - Fiscal policy: - Fiscal space is more constrained in most countries. - Fiscal support to cushion shocks should be temporary, well‑targeted, and narrowly focused. - Countries with fiscal space should let automatic stabilizers operate; others should reprioritize budget‑neutral measures to protect the most vulnerable, avoiding deficit‑financed measures. - Focus on quality of spending and rebuild policy space once conditions allow, supported by credible medium‑term fiscal frameworks. - Fiscal actions should be calibrated to avoid adding to inflationary pressures that could force tighter monetary policy and weigh on growth. - Structural reforms: - Pursue reforms to enable private sector‑led investment and productivity: improve business environment, modernize labor markets, enhance human capital, strengthen competition, and address governance weaknesses and corruption. - Harness new technologies for energy security and climate transition. - Manage AI risks: maximize benefits while mitigating labor market disruption and inequality—international cooperation is crucial. - Implement robust regulatory frameworks and oversight for digital finance, including stablecoins, guided by international norms. - International cooperation: - Multilateral approaches needed to preserve trade, moderate excessive global imbalances, address debt fragilities, and tackle climate risks. - To reduce excess imbalances: increase domestic demand in surplus economies (stronger private consumption, higher public infrastructure investment) and increase saving in deficit countries (curb fiscal deficits). - Support LIDCs and FCSs: step up implementation of the Bank‑Fund Three‑Pillar Approach to attract private financing and investment. - Enhance predictability and timeliness of debt restructuring processes for countries with unsustainable debt; target scarce concessional resources to the poorest and most vulnerable countries as traditional donor assistance trends down. ### IMF monitoring, tools, and engagements - IMF actions and tools: - The IMF is closely monitoring developments at country, regional, and global levels, running scenario analysis and sharing findings with the membership. - The Fund stands ready to fully deploy its existing lending toolkit to advise members, help develop capacity, and provide financing where needed. - Specific IMF activities: - Monetary policy advice: grounded in analysis of inflation dynamics, fiscal–monetary interactions, policy tradeoffs, and capital flows; mainstreaming the Integrated Policy Framework and advising on coping with negative supply shocks. - Financial policy: real‑time monitoring of systemic risks and macro‑financial vulnerabilities; Global Financial Stability Report identifies amplification channels and feedback loops. - Fiscal policy: assessing risks and designing credible plans; the Fiscal Monitor assesses spillover risks from high public debt in major economies and fiscal risks associated with declining development aid. - Structural policies: supporting reforms to enable private investment and productivity, improve labor market efficiency, strengthen competition, enhance skills for AI, and integrate climate risks into macro frameworks. - Fund modernization and reviews: - Comprehensive Surveillance Review (CSR) to upgrade surveillance toolkit for a more uncertain and shock‑prone world. - FSAP Review to ensure prioritization of systemic topics (such as AI and climate) and jurisdictions with a risk‑based approach. - Enhancements to Data and Macro‑Framework Consistency and ongoing Interim Update on the Implementation of the Framework for Fund Engagement on Governance. - Debt work and lending toolkit: - Finalizing review of the joint IMF–World Bank Debt Sustainability Framework for Low‑Income Countries to strengthen assessment and monitoring of debt vulnerabilities. - Continuing the Three‑Pillar Approach with the World Bank to promote growth, build resilience, and alleviate near‑term financing constraints. - Supporting country‑specific debt restructurings, including under the Common Framework, and advancing the Global Sovereign Debt Roundtable to improve coordination and effectiveness. ### Severe scenario and risks (key figures) - Global growth: about 2 percent in 2026 under the severe scenario. - Headline inflation: could rise just above 6 percent by 2027. - Distributional impact: effects on EMDEs nearly twice as large as on AEs. --- ### Section 2 — Institutional priorities, debt, and capacity development #### Debt management and transparency - Development of Public Debt Management Governance Framework guidelines to enhance transparency and governance. - Updates to guidance on the use of the Sovereign Risk and Debt Sustainability Framework for Market Access Countries. #### PRGT reforms and subsidy resources - Commitment to fully implementing the reforms approved in the 2024 Review of the Poverty Reduction and Growth Trust (PRGT) to bolster the Fund’s capacity to support low‑income countries in addressing their balance of payment needs. - Securing assurance of additional PRGT subsidy resources remains a top priority. #### Program design and conditionality - Ongoing Review of Program Design and Conditionality intended to enhance the effectiveness of IMF programs in the current environment. #### Capacity development (CD) - CD priorities and budgets set to ensure alignment with the Fund’s strategic objectives and members’ needs, through country‑tailored CD that reinforces surveillance and lending. - Building on the April 2024 CD Strategy Review, capacity development is being strengthened by mitigating external financing risks while enhancing funding flexibility and diversification. - Further analysis underway on the design and funding sources of a future CD Stabilization Mechanism. #### Institutional capacity, governance, and agility - Members continue to work toward the implementation of the 50 percent quota increase under the 16th General Review of Quotas (GRQ), which will strengthen the Fund’s capacity to respond to global crises. - Adoption of the Diriyah Guiding Principles is a major step to guide discussions on quota and governance reforms, including under the 17th GRQ. - Continued advancement of streamlining efforts to maintain agility and efficiency. - Emphasis on staff as the Fund’s greatest asset, with commitment to attracting and retaining top talent. *Source: ppea2026010 - Section 2* ### Section 1 ### DEVELOPMENT COMMITTEE: THE MANAGING DIRECTOR'S WRITTEN STATEMENT April 2026 ### Economic outlook and risks - The war in the Middle East has caused damage to critical infrastructure, disrupted transport, affected trade and energy, and could keep fuel and fertilizer prices high for a prolonged period. - Under the reference forecast (disruptions fade by mid-2026): - Global growth is projected at 3.1 percent in 2026 and 3.2 in 2027, below its recent pace of about 3.4 percent in 2024–25. - The forecast is revised down by 0.2 percentage point for 2026 relative to the January 2026 WEO; the 2027 forecast is unchanged. - Advanced Economies (AEs): - Growth projected at 1.8 percent in 2026 and 1.7 percent in 2027, compared with 1.9 percent in 2025. - Large negative effects expected in some net energy-importing economies, such as the euro area and the United Kingdom. - Emerging Market and Developing Economies (EMDEs): - Growth projected to fall from 4.4 percent in 2025 to 3.9 percent in 2026 and 4.2 percent in 2027. - Regional projections: - Middle East and Central Asia: from 3.6 percent in 2025 to 1.9 percent in 2026, then 4.6 percent in 2027. - Emerging and developing Asia: from 5.5 percent in 2025 to 4.9 percent in 2026. - Sub-Saharan Africa: from 4.5 percent in 2025 to 4.3 percent in 2026. - Latin America and the Caribbean: broadly stable at 2.3 percent in 2026 and pick up to 2.7 percent in 2027. - Emerging and developing Europe: sharp slowdown in 2025 to 2.0 percent expected to reverse modestly to around 2.1 percent in 2027. - Low-Income and Developing Countries (LIDCs): - Growth revised downward by 0.3 percentage points to 4.8 percent in 2026 and 4.9 percent in 2027. - Disproportionately affected if reliant on imported food and fuel, with risks from weaker remittances (notably from GCC links), fertilizer supply disruptions, high debt service burdens, tightening external financing, increased domestic borrowing, and inadequate foreign exchange reserves. - Medium-term prospects: - World output projected to expand at an average annual rate of 3.1 percent in 2028-31, below the pre-pandemic (2000–19) average of 3.7 percent. - Slower growth reflects China's slowdown, slower growth in other regions, geoeconomic fragmentation, and demographic pressures. - Inflation: - Global headline inflation projected to rise to 4.4 percent in 2026 before declining to 3.7 percent in 2027 (a 0.7 percentage point revision relative to October 2025). - Inflation revisions larger for EMDEs than for AEs, driven by higher energy and food prices and exchange rate depreciation. - Severe scenario: - Global growth cut to only about 2 percent in 2026. - Headline inflation could rise just above 6 percent by 2027. - Effects on EMDEs nearly twice as large as on AEs. - Downside risks dominate: - Protracted conflict in the Middle East, worsening geopolitical tensions, trade disputes, reevaluation of AI profit expectations leading to investment declines, abrupt financial market corrections, larger fiscal deficits and rising public debt, erosion of institutions and monetary policy credibility. - Limited upside risks: progress in trade talks, greater policy predictability, stronger AI-driven productivity gains, renewed structural reform momentum. ### Policy priorities and recommendations - General: - Strong fundamentals and policy agility are critical; credible policy frameworks, strong institutions, dynamic private sectors, and agile policymaking improve shock resilience. - Policymakers face difficult tradeoffs (price stability vs. growth, restraint vs. stimulus, risk management vs. innovation, fiscal strength vs. jobs and cohesion). - Monetary policy: - Central banks should remain vigilant, prepared to act decisively in line with their mandates, and guard against supply shocks destabilizing medium-to-long-term inflation expectations. - Where shocks are transitory and monetary policy is properly calibrated, policymakers may “look through” negative supply shocks. - Transparent communication and strong central bank independence are critical. - Temporary foreign exchange intervention and capital flow management measures may be warranted where imminent risk of excessive or disorderly exchange rate movements emerges, provided they support appropriate monetary and fiscal stances. - Financial sector policies: - Strengthen banking supervision and regulation, enhance systemic risk monitoring, and tighten oversight of non-bank financial intermediaries where leverage, liquidity mismatches, or links to banks have increased. - Strengthen capital and liquidity requirements at weaker institutions in line with internationally agreed standards, and be ready to support market functioning if liquidity strains emerge. - Fiscal policy: - Fiscal space is more constrained in most countries. - Fiscal support to cushion shocks should be temporary, well-targeted, and narrowly focused. - Countries with fiscal space should let automatic stabilizers operate; others should reprioritize budget-neutral measures to protect the most vulnerable, avoiding deficit-financed measures. - Focus on quality of spending and rebuild policy space once conditions allow, supported by credible medium-term fiscal frameworks. - Fiscal actions should be calibrated to avoid adding to inflationary pressures that could force tighter monetary policy and weigh on growth. - Structural reforms: - Pursue reforms to enable private sector-led investment and productivity: improve business environment, modernize labor markets, enhance human capital, strengthen competition, and address governance weaknesses and corruption. - Harness new technologies for energy security and climate transition. - Manage AI risks: maximize benefits while mitigating labor market disruption and inequality—international cooperation is crucial. - Implement robust regulatory frameworks and oversight for digital finance, including stablecoins, guided by international norms. - International cooperation: - Multilateral approaches needed to preserve trade, moderate excessive global imbalances, address debt fragilities, and tackle climate risks. - To reduce excess imbalances: increase domestic demand in surplus economies (stronger private consumption, higher public infrastructure investment) and increase saving in deficit countries (curb fiscal deficits). - Support LIDCs and FCSs: step up implementation of the Bank-Fund Three-Pillar Approach to attract private financing and investment. - Enhance predictability and timeliness of debt restructuring processes for countries with unsustainable debt; target scarce concessional resources to the poorest and most vulnerable countries as traditional donor assistance trends down. ### IMF monitoring, tools, and engagements - The IMF is closely monitoring developments at country, regional, and global levels, running scenario analysis and sharing findings with the membership. - The Fund stands ready to fully deploy its existing lending toolkit to advise members, help develop capacity, and provide financing where needed. - Specific IMF activities: - Monetary policy advice grounded in analysis of inflation dynamics, fiscal–monetary interactions, policy tradeoffs, and capital flows; mainstreaming the Integrated Policy Framework and advising on coping with negative supply shocks. - Financial policy: real-time monitoring of systemic risks and macro-financial vulnerabilities; Global Financial Stability Report identifies amplification channels and feedback loops. - Fiscal policy: assessing risks and designing credible plans; the Fiscal Monitor assesses spillover risks from high public debt in major economies and fiscal risks associated with declining development aid. - Structural policies: supporting reforms to enable private investment and productivity, improve labor market efficiency, strengthen competition, enhance skills for AI, and integrate climate risks into macro frameworks. - Fund modernization and reviews: - Comprehensive Surveillance Review (CSR) to upgrade surveillance toolkit for a more uncertain and shock-prone world. - FSAP Review to ensure prioritization of systemic topics (such as AI and climate) and jurisdictions with a risk-based approach. - Enhancements to Data and Macro-Framework Consistency and ongoing Interim Update on the Implementation of the Framework for Fund Engagement on Governance. - Debt work and lending toolkit: - Finalizing review of the joint IMF–World Bank Debt Sustainability Framework for Low-Income Countries to strengthen assessment and monitoring of debt vulnerabilities. - Continuing the Three-Pillar Approach with the World Bank to promote growth, build resilience, and alleviate near-term financing constraints. - Supporting country-specific debt restructurings, including under the Common Framework, and advancing the Global Sovereign Debt Roundtable to improve coordination and effectiveness. *THE MANAGING DIRECTOR’S WRITTEN STATEMENT TO THE DEVELOPMENT COMMITTEE—APRIL 2026* ### Section 2 ### ppea2026010 - Section 2 ### Debt management and transparency - Development of Public Debt Management Governance Framework guidelines to enhance transparency and governance. - Updates to guidance on the use of the Sovereign Risk and Debt Sustainability Framework for Market Access Countries. ### PRGT reforms and subsidy resources - Commitment to fully implementing the reforms approved in the 2024 Review of the Poverty Reduction and Growth Trust (PRGT) to bolster the Fund’s capacity to support low‑income countries in addressing their balance of payment needs. - Securing assurance of additional PRGT subsidy resources remains a top priority. ### Program design and conditionality - Ongoing Review of Program Design and Conditionality intended to enhance the effectiveness of IMF programs in the current environment. ### Capacity development (CD) - CD priorities and budgets are set to ensure alignment with the Fund’s strategic objectives and members’ needs, through country‑tailored CD that reinforces surveillance and lending. - Building on the April 2024 CD Strategy Review, capacity development is being strengthened by mitigating external financing risks while enhancing funding flexibility and diversification. - Further analysis is underway on the design and funding sources of a future CD Stabilization Mechanism. ### Institutional capacity, governance, and agility - Members continue to work toward the implementation of the 50 percent quota increase under the 16th General Review of Quotas (GRQ), which will strengthen the Fund’s capacity to respond to global crises. - Adoption of the Diriyah Guiding Principles is a major step to guide discussions on quota and governance reforms, including under the 17th GRQ. - Continued advancement of streamlining efforts to maintain agility and efficiency. - Emphasis on staff as the Fund’s greatest asset, with commitment to attracting and retaining top talent. *Source: ppea2026010 - Section 2* --- _Source: https://www.imf.org/-/media/files/publications/pp/2026/english/ppea2026010.pdf_