Emerging markets should get their fiscal houses in order while monetary conditions remain loose, the International Monetary Fund warned.

Governments have to some extent taken advantage of lower interest rates and cheap financing costs, but when monetary and financial conditions normalize, financing costs could rise, said Tao Zhang, the organization’s deputy managing director.

Many countries hold high levels of dollar-denominated debt so when global central banks gradually begin to tighten monetary policy, the dollar could strengthen. The Federal Reserve recently signaled its commitment to monetary tightening while the European Central Bank began discussions on tapering last month.

Developing economies must use their current funds “in a smart way [and] make sure public sector spending or new borrowings can be sustainable,” Zhang told CNBC on the sidelines of the International Monetary Fund meetings in Washington D.C.

Last week, S&P Global Ratings also sounded a word of caution on the matter.

Many emerging markets, particularly Turkey and South Africa, haven’t taken full advantage of global liquidity to clean up their sovereign balance sheets, the company’s sovereign global chief ratings officer Moritz Kraemer told CNBC.

On the topic of Asian growth, Zhang said he believed China’s Belt and Road Initiative could benefit the region, but he cautioned that participating countries must adopt economic strategies so their financing needs can be properly accommodated.