Latest news with #EraDabla-Norris
Zawya
24-04-2025
- Business
- Zawya
IMF backs Tinubu's removal of fuel subsidy
The International Monetary Fund (IMF) has said that the removal of fuel subsidy and spending of subsidy savings would take time to impact on the people. Deputy Director in the IMF's Fiscal Affairs Department, Era Dabla-Norris said this on Wednesday at the Fiscal Monitor session of the ongoing IMF/World Bank Annual Meetings in Washington DC. Dabla-Norris said that petrol subsidy removal impacts people's income immediately but there are tangible benefits like energy efficiency, but the ability to reallocate fiscal savings, takes time to materialise. The IMF Deputy Director called on the Federal Government to think about a comprehensive strategy on ways to ensure that petrol subsidy removal impacts positively on the people. Dabla-Norris said that Nigeria can raise more revenue through taxes, and such funds will serve as buffer to support economic stability. She said: 'Countries that put in place compensatory mechanisms like cash transfers or more targeted transfers, for those people who need it most, where the public doesn't trust the government, increasing support for social programmes makes it very tangible to the public.' Also speaking, IMF Director of the Fiscal Affairs Department at the IMF, Vitor Gaspar said the global fiscal outlook has deteriorated since the October 2024 Fiscal Monitor. He explained that major tariffs announcements, heightened uncertainty, financial market volatility, and diminishing foreign aid are adversely affecting public debts and deficits. According to him, the global public debt is now projected to reach nearly 100 percent of GDP by the end of the decade, surpassing the pandemic peak, with gross financing needs set to rise significantly. 'Sudden and disruptive tightening of financing conditions present a clear and present danger. Consequently, fiscal policy now faces a more pronounced trade-off among four key objectives: reducing debt, building and expanding buffers to address future shocks, meeting urgent spending needs, and enhancing growth prospects,' he said. The IMF said, countries with limited fiscal space should prioritize public spending within their planned budgets and allow automatic stabilizers to operate fully. The Fund said higher tariffs generally lead to a reduction in imports, with the extent of this decline depending on the price elasticity of demand at the bilateral product-country level. The Fund said, 'In addition, rising future debt could add further pressure on long-term interest rates and government financing costs. New analysis confirms that higher expected future debt and deficits could lead to higher long-term interest rates.' It explained that emerging market and developing economies should reduce spending and increase revenues by reforming tax systems, broadening tax bases, and improving revenue administration. The Fund said, 'They should rationalize public wage bills while safeguarding public investment and upgrading social safety nets. Reforming state-owned enterprises is essential to enhance resource allocation, foster sector growth, and mitigate fiscal risks. 'Countries with low tax-to-GDP ratios must reassess existing tax rates and thresholds, particularly for the value-added tax (VAT) and personal income taxes. Others might consider increasing VAT rates, reintroducing goods and services taxes, and rationalizing tax expenditures.' It highlighted that in cases of significant financial instability, fiscal policy can play a crucial role in supporting central banks and financial supervisors through tools such as direct lending, guarantees, and equity injections. 'Enhancing fiscal and debt governance, along with debt transparency, is essential to improve efficiency and mitigate debt risks. Countries must proactively identify and manage contingent liabilities, particularly those related to state-owned enterprises,' the Fund said. The IMF said, Governments should provide clear, detailed, and timely information about debt, including creditor composition and exposure to risks―such as interest rate and exchange rate risks. It noted that this transparency, which would benefit from sound legal underpinnings, fosters scrutiny and accountability, and reduces dependence on nontraditional debt instruments. The IMF stated, 'Targeted tax incentives can stimulate private investment and productivity through research and development. Strengthening spending efficiency – especially in health, education, and infrastructure investment – can raise an economy's production capacity. 'Timely and orderly debt restructuring alongside fiscal adjustments is essential for countries facing debt distress. Recent initiatives by the international community have streamlined sovereign debt restructuring and reduced timelines'. Copyright © 2022 Nigerian Tribune Provided by SyndiGate Media Inc. (
Al Etihad
23-04-2025
- Business
- Al Etihad
Global public debt may exceed pandemic levels, warns IMF
23 Apr 2025 18:36 REDDY (ABU DHABI)Global public debt is projected to rise by 2.8% in 2025—more than double the increase recorded in 2024—pushing debt levels above 95% of global GDP, according to the International Monetary Fund (IMF)'s Fiscal Monitor, released on Wednesday. 'This upward trend is likely to continue, with public debt nearing 100% of GDP by the end of the decade, surpassing pandemic levels,' the report noted. These projections are based on the IMF's World Economic Outlook reference scenario and factor in tariff announcements made between February 1 and April 4, 2025. 'Amid substantial policy uncertainty and a shifting economic landscape, debt levels could rise even further,' the paper IMF report, authored by Era Dabla-Norris, Vitor Gaspar, and Marcos Poplawski-Ribeiro, comes against a backdrop of rising geopolitical tensions, trade disruptions, and slowing growth. 'Major policy shifts underway have heightened global uncertainty,' the authors stated. They pointed to recent US tariff measures and global countermeasures as key drivers of financial volatility and reduced growth IMF outlined a worrying scenario: in the event of a severely adverse shock, global public debt could reach 117% of GDP by 2027—the highest since World War II and nearly 20 percentage points above current baseline forecasts.'Debt risks were already elevated,' the Fund said. The report emphasised that if economic output and revenue collections fall more sharply than anticipated—due to escalating trade frictions and geoeconomic fragmentation—debt burdens could escalate the IMF highlighted the consequences of rising interest rates and tighter financial conditions, particularly in emerging and developing economies. 'Tighter and more volatile financial conditions in the US may have ripple effects on emerging markets and developing economies, leading to higher financing costs,' it to the strain are demands for increased defence spending, fiscal support for those affected by trade shocks, and declining commodity prices. The Fiscal Monitor estimated that a significant rise in geoeconomic uncertainty alone could increase public debt by approximately 4.5% of GDP in the medium report called on governments to confront these fiscal risks through sound and credible policy action. 'In an uncertain and rapidly changing world, countries will need to first and foremost put their own fiscal house in order,' the IMF said. It urged nations to balance debt reduction with continued investment in social and infrastructure programmes, while adopting prudent medium-term fiscal frameworks. 'Fiscal policy should prioritise reducing public debt and establishing and widening buffers to address spending pressures and economic shocks,' the report said. For advanced economies, the IMF recommends tackling the challenges of ageing populations through pension and healthcare reforms, alongside tax base expansion. In emerging markets and low-income countries, it stressed the need to improve tax systems, implement gradual and credible fiscal consolidation plans, and pursue debt restructuring where necessary. 'Governments should focus on building public trust, ensuring fair taxation, and managing resources wisely,' the report concluded. 'By doing so, they can foster resilience and promote sustainable growth in uncertain times.'
