7 hours Ago By Kenechukwu Ofomah
The International Monetary Fund (IMF) has expressed concern over the mounting global economic uncertainties and debt burden. Victor Gaspar, the IMF’s Director of Fiscal Affairs, expressed his concerns on Wednesday at the ongoing IMF/World Bank Spring meeting in Washington, DC, USA, while presenting the fund’s global economic outlook. In the latest Fiscal Monitor published on Wednesday in Washington, USA, the IMF warned that public debt levels will exceed 95% of GDP, and may reach 100% by the end of the decade.
In a chart showing 175 countries, the Fund stated that 59 nations, including developed economies, account for only a third of the total, but comprise 80% of global GDP. While stressing that stark uncertainty is now a major feature of the global economy, Gaspar urged finance ministers to act boldly to decrease debt, rebuild financial buffers, rebuild public trust, tax fairly, and spend wisely with a long-term plan. “With sharply increasing and persistent uncertainty, tightening financing conditions push public debt at risk even higher in a fast, changing, and perilous world, ministers of finance must act urgently and decisively; they face Stark trade-offs and painful choices.
“Policy makers should invest their political capital in building confidence and trust that starts with keeping their own houses in order, which is especially important in a situation that tests the resilience of individual economies, not to mention the entire system. “Putting house in order involves three policy priorities. First, fiscal policy should be part of an overall stability-oriented macroeconomic policy.
Second, fiscal policy in most countries should aim to reduce public debt and rebuild buffers, creating space to respond to spending pressures and other economic shocks through a credible medium-term framework. Third, fiscal policy should, in conjunction with other structural policies, aim to improve potential growth, thereby easing policy trade-offs in these times of high uncertainty. Fiscal policy must serve as an anchor for confidence and stability, contributing to a competitive economy that delivers growth and prosperity for all.
“Ministers of finance must build trust, tax fairly, spend wisely, and take the long view,” he said. Earlier in his presentation, the IMF’s Chief Economist, Pierre-Olivier Gourinchas, stated that the IMF has projected shrinking global growth and declining world inflation, attributed to heightened uncertainties and key policy adjustments. Downgrading the 2025 U.
S growth forecast to 1.8%, down from 2.7% projected in January, the IMF Chief Economist attributed the slide to the sweeping tariffs imposed by President Donald Trump and countermeasures by trade partners.
He noted weakening consumer confidence, which has raised the risk of a U.S. recession to 40%, up from 25%, with inflation also projected to rise, adding that the global economy is similarly impacted.
The IMF’s Chief Economist said the fund has cut its worldwide growth estimate to 2.8%, down half a point from earlier forecasts, adding that Central banks across the world now face a slippery path in trying to balance inflationary control with declining growth. Our correspondent, attending the IMF/World Bank Spring meeting in Washington, further reports that energy subsidies and pension reform are key policies that countries must implement to enhance public trust, build stability, and promote growth in these challenging times.
.
