IMF urges governments to curb spending as debt pressures mount
The fund says rising bond yields and heavier interest costs leave governments less room to delay plans to reduce borrowing.
Key takeaways
- The IMF says average public debt is poised to reach 100% of GDP.
- The fund warns that delaying fiscal adjustments will make them more painful.
The International Monetary Fund urged governments to reduce spending, deficits and debt, warning that rising bond yields are adding to fiscal pressure. Average public debt is poised to reach 100% of gross domestic product, the highest level since World War Two, the fund said.
Rodrigo Valdes, head of the IMF’s Fiscal Affairs department, said governments had less room to delay. “The more countries wait, the more painful the adjustment becomes,” the fund said in a blog.
The IMF said the effective average cost of government financing is projected to rise to 3.7% by 2031, from 2.3% in 2021. It also urged emerging and developing economies to reduce fiscal vulnerabilities, while calling on low-income countries to strengthen tax systems and improve spending efficiency.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
