IMF official Rodrigo Valdes says governments in almost all economies face pressing fiscal challenges from high debt, higher interest rates and rising spending demands. According to the new Fiscal Monitor, global public debt is projected to exceed 100% of global GDP before 2030, and real interest rates on government debt remain above pre-pandemic levels. Spending pressures come from defence, particularly in Europe, population ageing that raises healthcare and pension costs, and climate-related investment needs. Governments have so far provided oil-related subsidies or tax cuts averaging about 0.5% of GDP, a cost that could reach between 1 and 1.5% of GDP if prices are not allowed to adjust, and Valdes urged measures that are targeted, temporary and transparent. He said China is less vulnerable than countries with comparable debt levels, citing its liquid assets, a not fully open financial account, low interest rates and a high savings rate.
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- IMF official highlights mounting global fiscal challenges
- IMF official highlights mounting global fiscal challenges
IMF official Rodrigo Valdes says almost all economies face pressing fiscal challenges, with high debt, higher interest rates and growing spending demands. According to the new Fiscal Monitor, global public debt is projected to exceed 100% of global GDP before 2030, and real interest rates on government debt remain above pre-pandemic levels. He points to defence spending, population ageing and climate change as added pressures, while low-income countries are especially exposed to oil price shocks and extreme weather. Governments have so far provided subsidies or tax cuts averaging about 0.5% of GDP to contain oil prices, and the IMF urges measures that are targeted, temporary and transparent, with revenue and spending considered together. Valdes adds that China is less vulnerable than countries with similar debt levels, thanks to liquid assets, a relatively low interest rate and a high savings rate.
- IMF official highlights mounting global fiscal challenges
- IMF official highlights mounting global fiscal challenges
Rodrigo Valdes, Director of the IMF's Fiscal Affairs Department, says governments in almost all economies face pressing fiscal challenges from high debt, higher interest rates and rising spending demands. The IMF's Fiscal Monitor projects global public debt to exceed 100% of global GDP before 2030, with real interest rates on government debt still above pre-pandemic levels. Valdes cites defense spending in Europe and the US, population aging that raises healthcare and pension costs, and climate investment needs as added pressures. Governments have so far provided subsidies or tax cuts averaging around 0.5% of GDP to contain oil prices, and he urges measures that are targeted, temporary and transparent. He also says China is less vulnerable than countries with comparable debt levels, citing its liquid assets, low interest rates and high savings rate.
- IMF official highlights mounting global fiscal challenges
Rodrigo Valdes, Director of the IMF's Fiscal Affairs Department, says governments in almost all economies face pressing fiscal challenges from high debt, higher interest rates and rising spending demands. The newly released Fiscal Monitor projects global public debt to exceed 100 percent of global GDP before 2030, and real interest rates on government debt remain above pre-pandemic levels. Defense spending, particularly in Europe and the U.S., along with population aging and climate-related investment needs, adds to the pressure. Governments have provided subsidies or tax cuts for oil averaging about 0.5 percent of GDP, which could rise to between 1 and 1.5 percent of GDP if oil-price increases are not passed on to consumers. Valdes urges measures that are targeted, temporary and transparent, and says China is less vulnerable than countries with comparable debt levels due to its liquid assets, partly closed financial account and high savings rate.
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