Alarm bells started ringing loudly FMIthe International Monetary Fund, which warned of a continued rise in global government debt. The forecasts, in fact, are not the best and the financial institution has reported an upward trend in the monitoring of public finances (Fiscal Monitor) which indicates a “worse than expected situation”.
Concerns about global public debt
According to the Public Finance Monitoring Report (Fiscal Monitor), global public debt will reach record figures. Specifically, according to the IMF, LThe forecast is $100,000 billion by the end of the year.overall 93 percent of global GDP.
In a situation that cannot fail to worry those in charge, the International Monetary Fund has launched an appeal. It is important to say that there is no increase in terms of percentage, public debt has already reached 93% in 2023, but what is increasing is value and above all. There is no reversal of the trend. And by the end of the decade it’s not out of the question that we could reach 100% of global GDP.
Sensational scene because, although it is a prophecy, it cannot always be trusted. Indeed, the IMF, in issuing a warning to economies around the world, stressed that “debt projections are overly optimistic, both because governments are too optimistic about their growth forecasts. There are hopes and because budget reforms are never fully implemented.” The words, The era of the lean-norseDeputy Director of the Department of Budgetary Affairs of the International Monetary Fund, which raises the alarm even further.
“In a severe downside scenario, global debt is projected to increase. Up nearly 20 percentage points of GDP over three years compared to the baseline estimateReaching 115% of GDP,” IMF report.
How to intervene
Along with making people shiver, the IMF also tries to provide solutions. An action plan that, if implemented by countries, could bring the situation back gradually, to prevent “the situation from getting worse than expected”.
How to do it? The International Monetary Fund has warned that to enable a real reduction in public debt, an adjustment of 3.8 percent of GDP per year would be needed by the end of the decade, compared with the 1 percent expected so far. But the situation may not necessarily change, as significant cuts in public spending, poorly calibrated, can have a significant impact on countries’ growth, leading to increased inequality and higher debt/GDP ratios. .
Alarm bells ahead of the US election
The IMF’s report on global public debt comes weeks after the US presidential election, in which both candidates, Kamala Harris and Donald Trump, promised new tax breaks and public spending that would add trillions of dollars to the federal deficit. may increase.
For example, Trump’s tax cut plans would add about $7.5 trillion in new debt over 10 years, more than double the additional $3.5 trillion in Harris’ plans, according to the Committee for a Responsible Federal Budget (CRFB). ), a budget think tank. . According to the Congressional Budget Office, the United States is expected to report a fiscal deficit of nearly $1.8 trillion, or more than 6.5 percent of GDP, in 2024.
