IMF: Pandemia to boost global debt level even in 2021

The COVID-19 Pandemia will continue to increase global public debt this year, but higher spending on accelerating vaccines are the fastest way to begin normalising state finances, the International Monetary Fund (FMN) announced today.

In the “Fiscal backend report for 2021”, The IMF says that by putting under control the faster inoculations on a global level, by 2025, tax revenues in developed economies could increase by over a billion dollars.

When the same scenario applies to the Fund's economic forecasts, gross global domestic product could rise by $9 trillion in the same period, as the reopening of companies and employment will be accelerated, the IMF report estimates.

“Vaxination, therefore, will pay more”, the Fund says. During virtual meetings at this week's joint spring session, the IMF and member states are encouraging member states to continue fiscal support for their economies and sensitive social groups and businesses until the pandemic is controlled.

The Fund estimated that governments worldwide, from the beginning of the pandemic until March 17th of this year, fiscal support due to the crown cost about $16 billion. This sum includes $10 trillion of higher costs and lost revenues, as well as $6 trillion of government credits, guarantees and injections of <x0).

According to the IMF's forecast, fiscal deficits in most countries will be narrowed slightly to 2021 due to the expiration or completion of the independence programmes related to pandemic, lowering unemployment claims and regaining budget revenues with business reopening.

The average budget deficit in developed countries reached 11.7 percent of GDP last year, which increased by 2.9 percent in 2019 and should drop to 10.4 percent this year, the IMF predicts.

Deficit in emerging economies will also drop slightly to 7.7 percent of GDP this year and to low income economies to 4.9 percent.

The report predicts that the average public debt of countries in the world will reach a 99 per cent record in 2021, compared to 97 per cent of last year, and that it will stabilise at that level. In developed economies, according to IMF projections, debt will rise to a record 122.5 per cent of GDP this year from last year's 120.1 per cent level.

The IMF has supported targeted support for poor families, minority groups, women and low-paid workers in the informal sectors of many economies, as well as small businesses.

And so, The IMF announced that some advanced, high-level debt countries may have to start renewing their fiscal reserves in order to prepare for future shocks.