“They are produced in a context of increasing debt levels in many countries and public finances already subjected to tensions,” the technicians explain were Dabla-Norris, Vitor Gaspar and Marcos Poplawski-lribeiro in a blog.
In addition, in many cases they will have to deal with increases in spending, such as defense in the euro zone.
“We foresee that world public debt increases at 2.8 percentage points this yearmore than double the estimated by 2024, placing debt levels above 95% of the gross domestic product, “they report.
Pandemic levels
And it is likely that this upward trend will continue to approach “100% of GDP at the end of the decade, overcoming pandemic levels,” experts predict.
In general, the IMF foresees that a third of governments, which represent 75% of world GDP, experience a deterioration of their debt. Among the affected countries are China and the United States, France, Italy, Brazil and Saudi Arabia.
But the situation varies from one country to another, said Gaspar.
China must spend more internally, despite its already high level of debt, to strengthen social protection and release internal consumption, and the United States must focus on reducing the public deficit to maintain debt under control.
“But to achieve this, the Government has options both in terms of income and expenses,” said Gaspar, director of the Department of Budget Affairs of the Fund, in an interview with the AFP.
This is not the case of emerging or developing countries, which must “invest in education and health. Strengthening their human capital is the best way to develop these countries, but this requires resources,” he acknowledged.
Europe must “find a way to finance its long -term military expenditure,” explains Gaspar.
If the situation does not improve “on the basis of the information currently available, world debt could reach 117% of GDP in 2027,” he warned.
Countries will have to find a balance between adjustment and support for economic growth based on their resources and peculiarities.
The support “to companies and communities affected by serious commercial dislocations must be both temporary and specific,” recommends the blog.
According to the IMF, advanced economies should address problems related to population aging, promoting pension and health reforms, and expanding the tax base.
In emerging and developing economies, “it is crucial to improve the tax system” and those with low income must “maintain the course of fiscal adjustments.”
