(MENAFN- Trend News Agency) U.S., WASHINGTON, April 17. Moderate fiscaltightening is expected to resume this year, said Vitor Gaspar,Director of the Fiscal Affairs Department, IMF, during a briefingon the Fiscal Monitor held as part of the IMF Spring Meetings inWashington, Trend reports.
He noted that the global economic and financial health hasimproved, inflation has fallen and risks to the global outlook arebecoming balanced.
“It is time to shift focus to fiscal policy. The global publicdebt edged up to 93 percent of GDP in 2023 and remained ninepercentage points above pre-pandemic levels. Moderate fiscaltightening is expected to resume this year, but significantuncertainty remains for a record number of countries with more thanhalf of the world's population are holding elections,” Gasparexplained.
He said evidence shows that in election years, realized deficitsare four percentage points of GDP higher than budgeted.
“Looking ahead, global public debt is projected to approach 100percent of GDP by the end of the decade. This rise in global publicdebt is primarily driven by China and the United States, wherepublic debt is now higher and expected to grow faster than prepandemic projections. While modest fiscal tightening is projectedover the medium term, it will be insufficient to stabilize publicdebt in many countries. And the current policies, primary deficitswill remain above that stabilizing levels in 2029 in about a thirdof advanced and emerging market economies and almost a quarter oflow income developing markets. Higher real interest rates and lowermedium term growth prospects add to that profit pressures,” hesaid.
Gaspar pointed out that against this backdrop, IMF's latestfiscal monitor calls for durable fiscal tightening to safeguardpublic finances.
“The base of consolidation should be calibrated depending on thefiscal risks and macroeconomic conditions that each country faces debt and deficits today helps avoid more painfuladjustments later. Fiscal tightening would also be an importantcontributor to completing the last mile of disinflation, speciallyin economies characterized by excess demand,” he said.
The Spring Meetings of the International Monetary Fund and theWorld Bank Group kicked off on April 15.
The main ministerial meetings and events will take place April17-19 with other events and activities taking place during theweek, April 15-20.
At the heart of the gathering are meetings of the jointDevelopment Committee and the IMF's International Monetary andFinancial Committee, which discuss progress on the work of theWorld Bank Group and the IMF.
The Spring Meetings bring together central bankers, ministers offinance and development, parliamentarians, private sectorexecutives, representatives from civil society organizations andacademics to discuss issues of global concern, including the worldeconomic outlook, poverty eradication, economic development, andaid effectiveness.
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