An Era of Permanent Crisis Management

That two of the IMF’s five largest debtors are Muslim-majority nations highlights a deeper trend: emergency lending has become a long-term feature of the global economy.

For Cairo and Islamabad, IMF loans have evolved from short-term bailouts to quasi-permanent lifelines. In both cases, external shocks — energy prices, global inflation, and capital flight — collided with domestic fragilities: limited industrial diversification, rising debt service costs and governance inefficiencies.

“The Fund is no longer just a firefighter,” says a London-based emerging-markets strategist. “It’s become an anchor for economies that haven’t yet built their own stabilisers.”

That dependence, however, comes at a cost. IMF programmes often entail politically sensitive reforms — subsidy cuts, tax hikes, privatisation — that governments struggle to sustain amid public fatigue.

The Politics of Conditionality

Egypt’s commitments under its latest IMF programme include divesting state-owned assets and fully floating its currency. Implementation has been partial at best. Pakistan faces even steeper demands: boosting tax collection, overhauling the energy sector, and reducing fiscal leakages from state-owned enterprises.

The reforms are economically sound but politically fraught. Both governments operate in fragile environments where public discontent can quickly spill into the streets.

Bangladesh’s case is different but instructive: once hailed as a model of stability, it now faces declining garment exports, mounting import costs and currency depreciation. The IMF’s SDR 2.9 billion arrangement aims to strengthen its foreign-exchange regime and encourage green investment — yet progress remains slow.

A Shared Pattern of Strain

Muslim-majority economies, from North Africa to South Asia, exhibit a recurring fiscal pattern: high subsidy spending, limited tax capacity and dependence on remittances or narrow export bases. As global liquidity tightens, these structural weaknesses are exposed. For investors, the rise in IMF credit to the developing world serves as both reassurance and warning. It signals a safety net — but also a lack of self-sufficiency.

In the words of one Fund official, “The IMF’s objective is to be temporary, not perpetual. But the scale of demand suggests the global economy is caught in a cycle of dependence.”

Towards Fiscal Independence

The challenge for Egypt, Pakistan, and their peers is not simply repaying the Fund — it is graduating from it. Sustained reform, credible fiscal discipline, and greater private-sector dynamism are prerequisites for independence.

That path requires politically difficult choices:

• Widening the tax base to reduce reliance on foreign borrowing.

• Reforming energy subsidies to create fiscal space.

• Allowing true exchange-rate flexibility to restore external competitiveness.

• Investing in human capital to diversify growth beyond low-value exports.

Without these adjustments, IMF credit will remain a revolving door — an expensive form of crisis management.

A Moment of Reckoning

The IMF’s own data show that the Fund’s outstanding credit is now approaching levels last seen after the 2008 financial crisis. But this time, the geography of debt is different. The largest borrowers are no longer confined to Latin America or Eastern Europe; they stretch from Cairo to Islamabad to Dhaka.

That shift underscores both the growing weight of Muslim-majority economies in global finance and the unfinished business of reform within them.

For these nations, 2025 may prove decisive: either the year they entrench another cycle of dependency, or the year they begin building resilience.

In the end, as one regional economist put it, “IMF debt isn’t destiny. It’s a diagnosis — and a chance to rewrite the prescription.”

Hafiz Maqsood Ahmed is the Editor-in-Chief of The Halal Times

Baba Yunus Muhammad

When the world’s most advanced economies can no longer afford their bills, alarm bells should ring far beyond their borders. In his analysis, “Governments Going Broke,” Henry Curr warns that rich-world debt has ballooned to levels unseen outside of wartime. Public debt across advanced economies now exceeds 110% of GDP — higher than at any point since the Napoleonic Wars, excluding the pandemic. As interest rates rise and populations age, the fiscal noose tightens. The threat, Curr argues, is not just a future of slower growth, but a dangerous flirtation with inflation that could upend the social contract on which modern democracies rest.

The Debt Trap of the Developed World

For decades, low borrowing costs allowed governments to pile on debt without pain. That era is over. Central banks, once accused of complacency, have tightened monetary policy to combat inflation. Now governments face the twin pressures of rising interest bills and political demands for ever more spending — on defence, health, pensions, and green transitions.

In Europe, taxation has reached political and practical ceilings. In America, the very notion of higher taxes remains electorally toxic. Politicians find themselves boxed in: unable to cut spending, unwilling to raise taxes, and forced to borrow more just to stand still. The result is a fiscal stalemate that risks igniting another round of inflation, shifting wealth from savers to debtors and from the prudent to the well-positioned.

Curr’s warning is stark: inflation is not just an economic nuisance but a corrosive force that undermines the middle class and destabilises democracy. Once unleashed, it erodes trust — in governments, in money, in the fairness of society itself.

The Forgotten Debtors: The Developing World’s Crisis

Yet while rich countries fret about the political consequences of debt, much of the developing world — particularly Africa — faces a crisis of survival.

Across sub-Saharan Africa, debt levels have surged over the past decade. According to the IMF, the region’s public debt-to-GDP ratio rose from an average of 32% in 2010 to nearly 60% by 2024. For some countries, such as Ghana, Zambia, and Ethiopia, the situation is far worse. These nations borrowed heavily to finance infrastructure, respond to the pandemic, and cushion citizens from the shocks of war and global inflation. Now, many are struggling to repay.

Unlike the rich world, developing nations borrow largely in foreign currencies, leaving them exposed to the whims of global financial markets. When the U.S. Federal Reserve raises rates, the cost of servicing dollar-denominated debt soars. The result: a slow-motion squeeze that leaves little room for social investment.

Ghana’s story is emblematic. After years of robust growth and ambitious borrowing for public projects, it defaulted on its external debt in 2022. The IMF stepped in with a $3 billion bailout — but only after painful austerity measures, currency depreciation, and inflation that exceeded 40%. Zambia, the first African nation to default during the pandemic, spent years negotiating with creditors under the G20’s Common Framework, a process so slow and fragmented that it discouraged other nations from seeking help.

A Global Squeeze

The world’s debt crisis is not merely an African or European problem — it is systemic. The rich world’s insatiable appetite for borrowing pushes up global interest rates and tightens financial conditions everywhere. When advanced economies flood bond markets with new issuance, capital is drawn away from riskier developing markets.

Meanwhile, China’s role as a major creditor complicates matters. Having lent hundreds of billions through its Belt and Road Initiative, Beijing now finds itself a reluctant participant in restructuring talks. Western creditors, multilateral institutions, and China remain at odds over who should bear the losses — and who should move first. The consequence is paralysis.

Inflation, Inequality, and the Fraying of the Social Contract

Curr’s argument about inflation’s social damage resonates acutely in poorer nations. In many African countries, inflation is already eroding real incomes and trust in government. When prices of food, fuel, and essentials spiral, the poor — who spend most of their income on consumption — bear the heaviest burden. In Nigeria, annual inflation has surpassed 30%, feeding public anger and protests.

The tragedy is that the global response remains fragmented. While rich countries debate whether to tax billionaires or cut welfare, poorer ones face stark trade-offs: pay teachers or service debt; import fuel or maintain currency reserves.

What Comes Next?

There is no easy way out. For advanced economies, fiscal discipline must return to the political agenda, however unpalatable that may be. That means honest conversations about the sustainability of welfare systems and the limits of debt-fueled growth.

For developing countries, particularly in Africa, debt restructuring needs to become faster, fairer, and more coordinated. Multilateral lenders and private creditors must recognize that drawn-out negotiations only deepen the pain and raise the eventual cost of default.

The world’s debt map is increasingly interconnected. When rich countries borrow without restraint, they distort global capital flows. When poor countries default, they destabilize regions and erase years of development gains.

As Curr reminds us, inflation punishes the middle class and frays societies. But unchecked debt — whether in Washington, Brussels, or Accra — could do worse: it could shatter the fragile trust that holds the global economic order together.

About the Author:
Baba Yunus Muhammad is the President of the Africa Islamic Economic Forum and a seasoned political analyst focusing on governance, democracy, and socio-economic transformation across Africa. He writes extensively on the intersection of faith, leadership, and political reform on the continent. babayunus@icloud.com

Baba Yunus Muhammad

As global wealth, technology, and trade shift eastward, the balance of the world economy is being rewritten. Can this transformation lead to a fairer, more cooperative global order — or will it reproduce the old inequalities in a new direction?

For more than a century, global economic power has been firmly anchored in the West. From Wall Street to the City of London, Western economies dictated the terms of trade, finance, and industrial progress. But in the past twenty years, that dominance has eroded. The gravitational center of the world economy is quietly — and now unmistakably — moving eastward. Across Asia, new centers of production, innovation, and consumption are rising, redrawing the economic map and redefining the balance of global influence.

The numbers tell the story plainly. The group of emerging economies known as BRICS — driven largely by China and India — has overtaken the advanced industrial nations of the G7 in their share of global GDP. Two decades ago, the G7 produced nearly half of global output; today, its share has fallen below 30 percent. BRICS+, now enlarged with new members, contributes over 35 percent and continues to grow. This marks more than a statistical milestone — it represents a fundamental rebalancing of power, as the long-standing Western dominance of capital and influence gives way to an increasingly multipolar economic order.

The same pattern appears in trade flows. The G7’s share of global merchandise exports has dropped from nearly 45 percent in 2000 to below 30 percent today. Meanwhile, the BRICS+ nations have more than doubled their share. China and India, once seen primarily as low-cost manufacturing hubs, are now central players in high-value industries, digital innovation, and services. Their economies are not merely expanding in scale; they are evolving in sophistication, integrating deeply into global supply chains and improving productivity across sectors.

Asia’s financial power underscores this shift even more clearly. The region now holds more than two-thirds of the world’s foreign exchange reserves — a striking indicator of self-sufficiency and resilience. China’s holdings alone exceed three trillion dollars, and other major Asian economies such as Japan, India, and South Korea maintain formidable reserves. These surpluses are not idle; they fund global infrastructure through initiatives like the Belt and Road, which spans more than 150 countries. This has made China the largest single source of outbound foreign direct investment, a position the West held unchallenged for much of the past century.

The rise of Asia is also social and technological. More than half of the world’s middle class now lives in Asia, driving a surge in consumer spending that shapes global demand. From mobile technology and artificial intelligence to renewable energy and fintech, Asian nations are setting the pace of innovation. China alone files more international patents annually than the United States and the European Union combined. The technological rivalry between the U.S. and China symbolizes this broader realignment: the struggle for digital dominance reflects a deeper contest over who will define the future of the global economy.

“The world does not need a different hegemony; it needs a different ethic — one rooted in shared prosperity, stewardship, and justice.”

This transformation presents both opportunity and uncertainty. A world with multiple centers of economic power could be more inclusive and resilient — but only if cooperation replaces confrontation. The growing interdependence of economies means that sustainable progress now depends on deliberate collaboration between East and West. Such cooperation must go beyond traditional trade and investment pacts. It should aim to reduce inequality, strengthen global resilience, and embed sustainability at every level of economic policy.

Global tax coordination could prevent the erosion of public revenues, while harmonized labor and environmental standards could make trade fairer. Integrating the Sustainable Development Goals and Paris climate commitments into trade and finance frameworks would align growth with human welfare and environmental balance. These are not only moral imperatives; they are economic necessities for a planet under strain.

Inclusive growth must become the new paradigm. Fair trade agreements should open markets not just for multinationals but also for small producers, women entrepreneurs, and marginalized communities. Access to technology and innovation should be democratized through affordable digital and green technology transfers. Financing models such as green bonds, climate funds, and Islamic sukuk instruments can channel capital toward ethical, inclusive development. Islamic finance, rooted in justice and partnership, offers a model that reconciles profitability with purpose — an approach the broader global economy can learn from.

Building capacity and sharing knowledge are equally crucial. Collaborative research on climate adaptation, food security, and digital transformation can help developing nations chart their own path to sustainable growth. Expanding South-South cooperation and managed labor mobility would enable both sending and receiving nations to benefit from global migration and skills exchange. Such mutual cooperation reflects the Qur’anic principle of ta‘awun — working together in righteousness and shared benefit — which is as relevant to modern economics as it is to faith.

Yet, true inclusivity also requires reforming global governance. Institutions like the IMF, World Bank, and WTO must evolve to reflect today’s economic realities, giving developing countries greater voice and agency. A fairer system of representation and decision-making would restore confidence in multilateralism and prevent the fragmentation of global trade into competing blocs. In Islamic economic thought, governance is an amanah — a sacred trust. That trust demands equity, transparency, and justice at all levels of global interaction.

Africa stands at the crossroads of this new economic geography. Positioned between East and West, it has the potential to shape — not just follow — the trajectory of global development. But to do so, the continent must invest boldly in its digital and technological future. Without digital infrastructure, data capabilities, and skilled human capital, Africa risks being left behind as the next industrial revolution unfolds. National strategies for broadband, data centers, artificial intelligence, and STEM education are essential foundations for competitiveness.

At the same time, African nations must ensure that economic growth remains broad-based and inclusive. Investment in education, healthcare, and skills training must be viewed as productive capital — not social expenditure. True development must serve the common good, or maslahah, ensuring that wealth uplifts communities and reinforces social justice.

Geopolitically, Africa’s strategic position makes it a key player in the emerging world order. It can use its membership in BRICS+ and other multilateral frameworks to advocate for fairer trade, technology transfer, and infrastructure investment. The continent should pursue balanced engagement with both East and West — welcoming investment from all partners while maintaining autonomy over its developmental vision. Chinese financing through the Belt and Road Initiative and Western capital in green energy and manufacturing should be leveraged with transparency, mutual benefit, and sustainability in mind.

The shift from West to East, then, is not merely a redistribution of wealth or production. It signals a profound transformation in how global power and values interact. For the Muslim world — stretching from North Africa to Southeast Asia — this moment carries special significance. The principles of Islamic economics, long neglected in mainstream policy, offer a moral and practical compass for the emerging order: an economy based on justice, moderation, cooperation, and shared prosperity.

If guided wisely, the rise of the East can herald not another cycle of dominance, but a rebalancing of ethics and purpose in global economics. The challenge before us is not to celebrate the end of Western supremacy, but to ensure that what replaces it is more humane, inclusive, and just. The new global economy must reflect the values of stewardship and fairness that Islam envisions — where prosperity is a collective good, not a zero-sum prize.

“As global power tilts eastward, the measure of progress will not be who leads, but how that leadership serves humanity.”

Author Bio

Baba Yunus Muhammad is the President of the Africa Islamic Economic Forum and a political and economic analyst with a focus on sustainable development, global trade, and Islamic economics. He writes regularly on issues of economic justice, governance, and the intersection of faith and finance.