The remaining emerging economies and low-income developing countries contribute only about 7 percent.
“COVID 19 and the policies implemented to address it have led to a rapid increase in debt levels and high levels. High and rising public and private debt poses financial stability and financial risks. “It’s related to,” IMF Finance Director Vitor Gaspar told reporters while publishing the 2021 Finance Monitor Report.
According to the recently announced International Monetary Fund, the COVID-19 pandemic and corresponding policies are projected to boost global debt to a new high of $ 226 trillion and India’s membership fees to rise to 90.6% in 2021. increase. Developed countries and China contributed more than 90% to the accumulation of global debt in 2020.
Financing restrictions are particularly severe for poor countries, according to Gaspar. Pointing out that fiscal policy proved its value in 2020, the increase in public debt in 2020 is fully justified by the need to address COVID-19 and its economic, social and financial implications. Said it was done. However, he said the increase is expected to be temporary.
Debt is expected to fall by about 1 percentage point of gross domestic product (GDP) this year and next, according to Gaspar.
After that, it is predicted to stabilize at about 97% of GDP. He said the dynamics of these debts are driven by a strong contribution from nominal GDP growth and a much more modest reduction in the primary deficit.
The IMF said in its report that risks to the fiscal outlook are increasing. Expanding vaccine production and delivery, especially to emerging markets and low-income developing countries, will limit further damage to the global economy.
“On the downside, new variants of the virus, low vaccination rates in many countries, and delays in vaccination of some people can cause new damage and increase pressure on public budgets. The realization of accidental liability, including loans and guarantee programs, can also lead to unexpected increases in government debt. “
“Further pressure could come from social dissatisfaction, and the crisis is estimated to have driven 65 to 75 million people into poverty in 2021 compared to pre-pandemic trends, especially in emerging markets and low. In income-developing countries, large government funding needs are the source of vulnerabilities, funding conditions are sensitive to global interest rates, and central banks are beginning to raise short-term reference rates, “the IMF said. Stated.
Fiscal policy needs to respond agilely to these challenges, accelerate global economic transformation, make it more productive, inclusive, environmentally friendly, and resilient to future health and other crises. Said.
At the same time, he said it was important to ensure transparency and accountability, to draw a medium-term path to rebuild the fiscal buffer, and to move towards sustainable development goals.
Fiber2Fashion News Desk (DS)
Global debt jumps to a new high of $ 226 trillion: IMF
Source link Global debt jumps to a new high of $ 226 trillion: IMF