Research trip to World Bank Group/IMF Annual Meetings 2025
Our Emerging Markets Fixed Income team visited Washington, D.C. in October 2025 during the International Monetary Fund’s Annual Meetings. Over a period of four days, they had a chance to meet several delegations representing governments, administrative institutions as well as IMF teams covering the respective countries. The team participated in more than 40 individual meetings with representatives from almost 30 countries in our investment universe. The meetings were very valuable in terms of either reaffirming our views about the development of the countries or challenging previous opinions.
The sentiment among investors and policymakers reflected the current reality but remained broadly optimistic. The external environment remains uncertain but many countries have done a lot to reform their economies to better withstand various challenges. Geopolitics remain a topic that affects most of the discussions as the global political playing field is being reorganized. On a positive note, the worst fears about possible sudden stops due to trade disputes have been averted and the relationship between the US and China remains “the elephant in the room”. The team left Washington with positive expectations regarding the investment environment for emerging markets. The global economy faces a series of challenges but for the time being, the heightened resilience in many emerging economies combined with the need for diversification in investment portfolios seems to be a supportive cocktail for emerging market debt and currencies.
The following summaries, prepared by the Emerging Markets Fixed Income team, provide selected highlights from the meetings.
Türkiye
Türkiye’s economy has made steady progress but inflation prints have recently come out on the high side compared to expectations. This has mainly been due to weather-driven food price shocks and market adjustments. However, Finance Minister Mehmet Şimşek attributes these inflationary pressures to extraordinary events like drought and frost, rather than policy missteps. The government’s removal of price controls in sectors such as education and apartment rents has led to a period of catch-up, which is considered necessary for market normalization. Social housing initiatives are underway and wage and pension adjustments are being managed carefully to avoid fueling further inflation. Fiscal discipline remains a priority, with earthquake-related spending absorbed without undermining broader fiscal targets.
Looking ahead, Türkiye’s administration is focused on structural reforms, including changes to state-owned enterprises, procurement, social security and taxation. With no elections on the horizon, policymakers have the flexibility to implement these reforms. The expectation is that inflation will gradually subside as the effects of recent shocks fade and reforms take hold. However, political uncertainty is likely to persist and negative headlines from a financial market perspective may increase as the 2028 presidential elections approach. This ongoing uncertainty remains a key risk for investors, alongside the need for continued orthodox economic policies to maintain stability and confidence in Türkiye’s markets.
Indonesia
Indonesia’s official narrative emphasizes resilience and reform but a closer look suggests that investor caution is needed. While the authorities highlight the country’s history of domestically driven growth, external pressures – especially from China’s slowdown and tighter global financial conditions – are already slowing momentum. Credit growth is weakening and the government’s reliance on macroprudential tools may not be enough to counteract these headwinds.
The new Finance Minister’s pledge to abide by fiscal rules is welcome but the latest budget raises questions. Off-balance-sheet expenditures are rising and revenue projections seem optimistic. The government’s move to channel central bank deposits into commercial banks for favored projects could backfire, raising concerns about transparency and the true health of the financial sector.
The newly established sovereign wealth fund Danantara is emerging as a key focal point for financial markets. The fund began with USD 20 billion in initial capital and is projected to eventually manage over USD 900 billion in assets –making it one of the largest sovereign wealth funds globally. It remains unclear how much it will be used as an “unaccountable” extension of government to execute fiscal policy and for the production of public goods.
Uzbekistan
Uzbekistan attracted a lot of positive attention among both investors and IMF officials. Decisive reform momentum has continued for several years now and the reforms are really starting to bear fruit. Investor sentiment around Uzbekistan remains strong, enabling financing at much more supportive levels compared to a few years ago.
One challenge that Uzbekistan’s administration needs to address is the possibility of an over-heating economy. The external environment has turned very supportive for the country and some sectors are showing signs of strong acceleration. The industry around gold production, in particular, has gained a lot of support from the sharp rise in market prices for gold recently and the IMF is advising the government to not apply further pro-cyclical policies.
Despite a lot of focus on the effects of high gold prices on Uzbekistan’s economy, it is benefitting from reforms and strengthening fundamentals. Inflation remains elevated but is expected to start trending towards the target range set by the central bank as the effects of energy price reforms start to fade. Growth has remained strong at over 6.5% annually according to the IMF. A highly anticipated reform has been the gradual liberalization of the foreign exchange market, which has led to the strengthening of the domestic currency during the last few quarters. This is welcomed by both the investor community as well as the IMF. This new flexibility is expected to help balance the economy going forward and to help contain inflation in the short term.
The administration has gained significant credibility in the eyes of investors as well as the IMF. The next stages of the reform agenda are expected to focus on privatizations and on strengthening the institutional framework around sovereign-owned entities. These projects will need another kind of effort and are often perceived as being more complicated. These reforms are considered very important and, among the investor community, off-balance sheet liabilities are deemed to be among the biggest risks going forward.
A longstanding priority for the administration is the development of the domestic capital markets. In our discussions with the administration, we have agreed that enabling financing in the domestic currency is an important step in addressing the risks of macroeconomic imbalances. In our discussions, we gained confidence that this agenda remains high on the list of priorities. Overall, Uzbekistan continues to attract positive attention from the investor community, which supports the positive efforts of the administration to drive development.
Nigeria
The reform agenda has remained on track and Nigeria has successfully attracted a lot of positive attention among foreign investors. The administration’s ability to push through tough reforms has surprised many. The deep and broad reforms that have been implemented have unlocked significant revenues and sentiment has turned very supportive. The central bank has gained credibility and this has been beneficial in terms of mobilizing funding from non-domestic sources. In some of the discussions, the view emerged that further reforms could prove challenging, given that many reforms have already been completed. Nevertheless, the message from the administration remains strong. The big focus going forward will continue to be on revenue mobilization and diversifying the economy.
Mozambique
We met with the IMF Mozambique team during the autumn meetings. Mozambique remains a fragile country, with natural disasters exacerbating existing vulnerabilities. The urgent need to restore fiscal prudence is growing, as there are no quick fixes to the country’s fiscal challenges. The authorities must pursue fiscal consolidation and greater exchange rate flexibility to stabilize the macroeconomic framework. They already requested an IMF program in April and the team had constructive talks with them in August. Some key matters have yet to be addressed so there is no program on the immediate horizon, according to the IMF team. While key components are still pending, Mozambique would qualify for a basic IMF arrangement.
There are some positive signs from TotalEnergies’ Cabo Delgado LNG project together with the Exxon and Eni projects, though fiscal benefits will only materialize in 2029–2030. The scale of LNG investments – USD 50 billion in a USD 20 billion economy – could be transformative but bridge financing is required in the meantime. Financing pressures are mounting: the fiscal deficit averages 5.4%, with reliance on short-term local currency funding. Around 80% of funding is sourced domestically and partly relies on monetary financing from the central bank.
Mozambique’s outlook hinges on prudent policy choices, transparent communication and leveraging LNG potential without compromising fiscal sustainability. The political scope for the government to tackle difficult issues after the contentious 2024 general elections could be limited.
El Salvador
El Salvador has been under the strong and popular rule of President Nassim Bukele and his Nuevas Ideas party since the 2023 elections, when the FMLN and ARENA parties, which were traditionally in power, moved to the opposition. Nuevas Ideas holds 90% of legislative seats and governs most of the municipalities on a local level. Earlier this year, El Salvador agreed on a new EFF arrangement with the IMF and the IMF team had just come back from San Salvador after five days of discussions with the authorities related to the second review of the program. Discussions centered on the country’s strong economic performance and reform momentum. The economy is booming and exports are doing well. Overall, the IMF team was very positive on the developments in the country. Remittances have continued to experience double-digit growth, supporting the economy. They saw some slippage on the fiscal side, primarily attributed to global economic turmoil as the government had decided to accelerate some investments to respond to the situation.
The country has radically changed in a positive direction and initial doubts over the policies of the current administration have faded after a strong focus on implementation. The government currently has strong support from the public ahead of the next elections, which are scheduled for 2027. El Salvador’s success in tackling crime has set an example for many Latin and Central American countries. Strong diplomatic relations with the US are also of benefit to the country.
Challenges remain, particularly in raising El Salvador’s potential growth rate to 3.5–4%, give that it is constrained by low population growth (0.3–0.4%) compared to neighboring countries. The message to the authorities is clear: El Salvador has already achieved significant progress and it is essential that it continues on this path. The IMF program is viewed as effective, with spreads narrowing and strong interest from the president himself in maintaining collaboration.
For further reflections on emerging market developments and policy trends, listen to the podcast with Tomi Einesalo, Portfolio Manager at LGT Capital Partners, available here.
