IMF Urges Faster Debt Cuts as Government Bond Yields Climb
The fund says rising borrowing costs are squeezing public finances, with average government debt poised to reach 100% of GDP.
Key takeaways
- The IMF urged governments to reduce spending, deficits and debt.
- The G7’s average 10-year bond yield rose more than 110 basis points from February to September.
The International Monetary Fund urged advanced economies and other countries to cut spending, deficits and debt, warning that delays would make adjustments harder. Average public debt was poised to reach 100% of gross domestic product, the highest level since World War Two, the fund said.
The G7’s average 10-year government bond yield climbed more than 110 basis points from February to September, reaching its highest level in nearly two decades, according to the IMF. The fund cited higher oil prices, persistent inflation, stronger investment demand and higher-than-expected AI growth as factors behind rising yields.
The IMF projected the average cost of government financing would rise to 3.7% by 2031, from 2.3% in 2021. It also urged emerging and developing economies to reduce fiscal vulnerabilities, while saying low-income countries needed stronger tax systems and more efficient spending.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
