IMF Sees Global Debt Growing Faster, Higher
The International Monetary Fund (IMF) sees global debt growing faster and higher than projected before the pandemic, Vitor Gaspar, head of the Fund’s Fiscal Affairs Department said ahead of the launch of the Fiscal Monitor (FM) Wednesday in Marrakech, Morocco.
“Government debt ratios declined in 2021 and 2022. It will turn back up in 2023. Going forward global public debt is not only higher, but also projected to grow faster than foreseen before the pandemic,” said the former Portuguese Finance Minister.
“At the current rate of about one percentage point a year, global public debt will be approaching 100% of GDP by the end of the decade,” meaning that the world will have more debt than their current economies are valued.
Tackling this wave of debt means that governments must look for ways to firm up their balance sheets by raising revenue, promoting growth and reducing spending.
“Balancing public finances is increasingly challenging due to rising spending demands. Fiscal tightening is necessary in most countries. This is not only to build buffers against future shocks and reduce financial risks but also to help bring inflation back to parity,” said Adrian.
The Fiscal Monitor report, published by the IMF twice yearly, looks particularly at how governments can muster investment in reducing the environmental impact of carbon emissions.
“Fiscal Monitor: Climate Crossroads warns that scaling up current policies to achieve Net Zero would lead to unsustainable debt. Maintaining current policies would invite catastrophic failure in achieving Net Zero. The solution lies in a balanced approach, combining carbon pricing and other tools and creating a policy framework that mobilises the private sector.” #IMF Sees Global Debt Growing Faster, Higher