Latest news with #VitorGaspar
IOL News
24-04-2025
- Business
- IOL News
IMF warns of soaring global debt levels as countries face tough economic choices
IMF Director for Fiscal Affairs Department, Vitor Gaspar; flanked by Deputy Director for Fiscal Affairs Department, Era Dabla-Norris; and Davide Furceri, Division Chief for Fiscal Affairs Department during the released of the IMF's Fiscal Monitor report in Washington D.C. on Wednesday. The International Monetary Fund (IMF) has issued a stark warning that over one-third of countries are set to experience an increase in public debt by 2025, compared to the previous year. The concerns arise amidst escalating uncertainties and significant policy shifts that are altering economic and fiscal landscapes globally.. According to the IMF's Fiscal Monitor report released on Wednesday, these economies collectively represent about 75% of global GDP and included major players— China and the United States—as well as Australia, Brazil, France, Germany, Indonesia, Italy, Mexico, Russia, Saudi Arabia, South Africa, and the United Kingdom. The Fiscal Monitor projects global public debt to increase by 2.8 percentage points this year—more than twice the estimate for 2024—pushing debt levels above 95% of world gross domestic product. Vitor Gaspar, IMF director for the fiscal affairs department, said global public debt was high and rising. Gaspar said policymakers were facing tough tradeoffs between reducing debt, meeting urgent spending needs and maintaining growth. She said getting fiscal policy right was essential at a time of heightened uncertainty. 'Debt risks were already elevated. According to the Fiscal Monitor's debt-at-risk, which utilizes data up to December 2024, in a severely adverse scenario global public debt could reach 117% of GDP by 2027. This would represent the highest level since World War II, exceeding reference projections by almost 20 percentage points,' Gaspar said. 'Risks to the fiscal outlook have further intensified. Debt levels may rise even further than the debt-at-risk estimates if revenues and economic output decline more significantly than current forecasts due to increased tariffs and weakened growth prospects. 'Additionally, escalating geoeconomic uncertainties could heighten debt risks, driving up public debt through increased expenditures, particularly in defense. Demands for fiscal support could also rise for those vulnerable to severe disruptions from trade shocks, pushing up spending.' Global public debt projections have been revised upwards, while tariffs, uncertainty and market volatility, increased defense spending, and challenging foreign aid are intensifying risks. The Fiscal Monitor estimates that a significant rise in geoeconomic uncertainty could lead to a public debt increase of approximately 4.5% of GDP in the medium term. Gaspar said countries must implement gradual fiscal adjustments within credible medium-term frameworks to reduce debt and build buffers against heightened uncertainty. She said reforms to major expenditure programs, such as energy subsidies and pensions, were crucial to reducing fiscal vulnerabilities while fostering growth. 'Countries with limited room in government budgets should implement gradual and credible consolidation plans and allow automatic stabilizers, like unemployment benefits, to work effectively,' Gaspar said. 'Any new spending needs should be offset by spending cuts elsewhere or new revenues. For countries with greater fiscal flexibility, it is important to utilize available resources judiciously within well-defined medium-term plans. Fiscal support for businesses and communities impacted by severe trade dislocations should be both temporary and targeted, with a strong emphasis on transparency and effective cost management. 'Additionally, fiscal policy, alongside other structural policies, should focus on enhancing potential growth. This can help ease challenging tradeoffs between growth and debt sustainability. For instance, well-designed pensions and energy subsidy reforms can generate savings that can be used to support social programs and infrastructure investments.' BUSINESS REPORT
Free Malaysia Today
23-04-2025
- Business
- Free Malaysia Today
IMF says tariff pressures to push global public debt past pandemic levels
The International Monetary Fund's fiscal monitor projected that global public debt will grow 2.8 percentage points to 95.1% of global GDP in 2025. (EPA Images pic) WASHINGTON : Economic pressures from steep new US tariffs will push global public debt above pandemic-era levels to nearly 100% of global GDP by the end of the decade as slower growth and trade strain government budgets, the International Monetary Fund said today. The IMF's latest fiscal monitor projected that global public debt will grow 2.8 percentage points to 95.1% of global GDP in 2025. It said the upward trend was likely to continue, reaching 99.6% of global GDP by 2030. Global public debt peaked in 2020 at 98.9% of GDP as governments borrowed heavily for Covid-19 relief and output shrank. Debt fell 10 percentage points within two years. However, it has been edging back up and the latest forecast showed it accelerating. 'Major tariff announcements by the US, countermeasures by other countries, and exceptionally high levels of policy uncertainty are contributing to worsening prospects and heightened risks,' the IMF said in the report. It added that this leaves governments with more difficult trade-offs as their budgets are stretched by higher defence spending needs, demands for more social support and rising debt service costs that could grow with more inflationary pressures. Governments' annual fiscal deficits are forecast to average 5.1% of GDP in 2025, compared to 5.0% in 2024, 3.7% in 2022 and 9.5% in 2020, according to the report. Slower growth, more debt The budget outlook is based on the IMF's 'reference forecast' for 2.8% global GDP growth this year in its latest World Economic Outlook, which includes tariff developments through April 4. The economic outlook, as well as the fiscal outlook, would worsen if steeper tariffs from President Donald Trump and retaliatory measures kick in. Debt levels may rise above 117% by 2027 – the level forecast in a severely adverse scenario – 'if revenues and economic output decline more significantly than current forecasts due to increased tariffs and weakened growth prospects'. 'Debt at that level would represent the highest share of GDP since world war two,' the IMF said. 'Much of the debt growth is concentrated in larger economies,' IMF fiscal affairs director Vitor Gaspar told Reuters. 'About one third of the IMF's 191 member countries now have debt growing at rates faster than before the pandemic, but they make up about 80% of global GDP,' he added. The rising pressures could prompt increasing demands for social spending, especially in countries vulnerable to severe disruptions from trade shocks, that could push spending higher, the report said. Adding to difficulties is a pullback in development aid by the US and other wealthier countries, continuing a trend in recent years, 'and that means that these countries will face even starker trade-offs than would otherwise be the case,' Gaspar said. US improvement – for now The IMF forecasts a slight improvement to US annual budget deficits over the next two years to 6.5% of GDP for 2025 and 5.5% for 2026, compared to 7.3% for 2024. This was due to a combination of increased tariff collections based on announced measures as well as continued US output growth. 'So the performance of US economy has been strong in recent years, and that helps the budget. It helps in the US, it helps everywhere,' Gaspar said. However, the US forecast assumed that Republican tax cuts passed in 2017 expire at the end of the year as scheduled. The Trump administration wants to extend them, which budget experts said would add some US$4 trillion to US debt over a decade without offsets. China's fiscal deficits are expected to grow sharply in 2025, to 8.6% of GDP from 7.3% in 2024, settling at 8.5% in 2026. Economic stimulus spending was cited by the IMF as a reason that China's 2025 growth forecast held at 4%, partly offsetting a major output drag from tariffs. Despite the increase in debt pressures, the IMF doubled down on its advice to countries to prioritise public debt reductions to help build fiscal buffers to address future economic shocks, which will require a delicate policy balance. 'Countries with limited room in government budgets should implement gradual and credible consolidation plans and allow automatic stabilisers, like unemployment benefits, to work effectively,' the IMF said. 'Any new spending needs should be offset by spending cuts elsewhere or new revenues,' it said.
RTÉ News
23-04-2025
- Business
- RTÉ News
IMF says tariff pressures to push public debt past Covid levels
Economic pressures from steep new US tariffs will push global public debt above pandemic-era levels to nearly 100% of global GDP by the end of the decade as slower growth and trade strain government budgets, the International Monetary Fund said today. The IMF's latest Fiscal Monitor projected that global public debt will grow 2.8 percentage points to 95.1% of global GDP in 2025. It said the upward trend was likely to continue, reaching 99.6% of global GDP by 2030. Global public debt peaked in 2020 at 98.9% of GDP as governments borrowed heavily for Covid-19 relief and output shrank. Debt fell 10 percentage points within two years. But it has been edging back up and the latest forecast showed it accelerating. "Major tariff announcements by the United States, countermeasures by other countries, and exceptionally high levels of policy uncertainty, are contributing to worsening prospects and heightened risks," the IMF said in the report. It added that this leaves governments with more difficult trade-offs as their budgets are stretched by higher defense spending needs, demands for more social support and rising debt service costs that could grow with more inflationary pressures. Governments' annual fiscal deficits are forecast to average 5.1% of GDP in 2025, compared to 5% in 2024, 3.7% in 2022 and 9.5% in 2020, according to the report. The budget outlook is based on the IMF's "reference forecast" for 2.8% global GDP growth this year in its latest World Economic Outlook, which includes tariff developments up to April 4. The economic outlook, as well as the fiscal outlook, would worsen if steeper tariffs from President Donald Trump and retaliatory measures kick in. Debt levels may rise above 117% by 2027 - the level forecast in a severely adverse scenario - "if revenues and economic output decline more significantly than current forecasts due to increased tariffs and weakened growth prospects." Debt at that level would represent the highest share of GDP since World War Two, the IMF said. Much of the debt growth is concentrated in larger economies, IMF Fiscal Affairs Director Vitor Gaspar told Reuters. About one third of the IMF's 191 member countries now have debt growing at rates faster than before the pandemic, but they make up about 80% of global GDP, he added. The rising pressures could prompt increasing demands for social spending, especially in countries vulnerable to severe disruptions from trade shocks, that could push spending higher, the report said. Adding to difficulties is a pullback in development aid by the US and other wealthier countries, continuing a trend in recent years, "and that means that these countries will face even starker trade-offs than would otherwise be the case," Gaspar said. The IMF forecasts a slight improvement to US annual budget deficits over the next two years to 6.5% of GDP for 2025 and 5.5% for 2026, compared to 7.3% for 2024. This was due to a combination of increased tariff collections based on announced measures as well as continued US output growth. "So the performance of US economy has been strong in recent years, and that helps the budget. It helps in the US, it helps everywhere," Gaspar said. But the US forecast assumed that Republican tax cuts passed in 2017 expire at the end of the year as scheduled. The Trump administration wants to extend them, which budget experts said would add some $4 trillion to US debt over a decade without offsets. China's fiscal deficits are expected to grow sharply in 2025, to 8.6% of GDP from 7.3% in 2024, settling at 8.5% in 2026. Economic stimulus spending was cited by the IMF as a reason that China's 2025 growth forecast held at 4%, partly offsetting a major output drag from tariffs. Despite the increase in debt pressures, the IMF doubled down on its advice to countries to prioritise public debt reductions to help build fiscal buffers to address future economic shocks, which will require a delicate policy balance. "Countries with limited room in government budgets should implement gradual and credible consolidation plans and allow automatic stabilizers, like unemployment benefits, to work effectively," the IMF said.
Reuters
23-04-2025
- Business
- Reuters
IMF says tariff pressures to push global public debt past pandemic levels
WASHINGTON, April 23 (Reuters) - Economic pressures from steep new U.S. tariffs will push global public debt above pandemic-era levels to nearly 100% of global GDP by the end of the decade as slower growth and trade strain government budgets, the International Monetary Fund said on Wednesday. The IMF's latest Fiscal Monitor projected that global public debt will grow 2.8 percentage points to 95.1% of global GDP in 2025. It said the upward trend was likely to continue, reaching 99.6% of global GDP by 2030. Global public debt peaked in 2020 at 98.9% of GDP as governments borrowed heavily for COVID-19 relief and output shrank. Debt fell 10 percentage points within two years. But it has been edging back up and the latest forecast showed it accelerating. "Major tariff announcements by the United States, countermeasures by other countries, and exceptionally high levels of policy uncertainty, are contributing to worsening prospects and heightened risks," the IMF said in the report. It added that this leaves governments with more difficult trade-offs as their budgets are stretched by higher defense spending needs, demands for more social support and rising debt service costs that could grow with more inflationary pressures. Governments' annual fiscal deficits are forecast to average 5.1% of GDP in 2025, compared to 5.0% in 2024, 3.7% in 2022 and 9.5% in 2020, according to the report. SLOWER GROWTH, MORE DEBT The budget outlook is based on the IMF's "reference forecast" for 2.8% global GDP growth this year in its latest World Economic Outlook, which includes tariff developments through April 4. The economic outlook, as well as the fiscal outlook, would worsen if steeper tariffs from President Donald Trump and retaliatory measures kick in. Debt levels may rise above 117% by 2027 -- the level forecast in a severely adverse scenario -- "if revenues and economic output decline more significantly than current forecasts due to increased tariffs and weakened growth prospects." Debt at that level would represent the highest share of GDP since World War Two, the IMF said. Much of the debt growth is concentrated in larger economies, IMF Fiscal Affairs Director Vitor Gaspar told Reuters. About one third of the IMF's 191 member countries now have debt growing at rates faster than before the pandemic, but they make up about 80% of global GDP, he added. The rising pressures could prompt increasing demands for social spending, especially in countries vulnerable to severe disruptions from trade shocks, that could push spending higher, the report said. Adding to difficulties is a pullback in development aid by the U.S. and other wealthier countries, continuing a trend in recent years, "and that means that these countries will face even starker trade-offs than would otherwise be the case," Gaspar said. U.S. IMPROVEMENT-FOR NOW The IMF forecasts a slight improvement to U.S. annual budget deficits over the next two years to 6.5% of GDP for 2025 and 5.5% for 2026, compared to 7.3% for 2024. This was due to a combination of increased tariff collections based on announced measures as well as continued U.S. output growth. "So the performance of U.S. economy has been strong in recent years, and that helps the budget. It helps in the U.S., it helps everywhere," Gaspar said. But the U.S. forecast assumed that Republican tax cuts passed in 2017 expire at the end of the year as scheduled. The Trump administration wants to extend them, which budget experts said would add some $4 trillion to U.S. debt over a decade without offsets. China's fiscal deficits are expected to grow sharply in 2025, to 8.6% of GDP from 7.3% in 2024, settling at 8.5% in 2026. Economic stimulus spending was cited by the IMF as a reason that China's 2025 growth forecast held at 4%, partly offsetting a major output drag from tariffs. Despite the increase in debt pressures, the IMF doubled down on its advice to countries to prioritize public debt reductions to help build fiscal buffers to address future economic shocks, which will require a delicate policy balance. "Countries with limited room in government budgets should implement gradual and credible consolidation plans and allow automatic stabilizers, like unemployment benefits, to work effectively," the IMF said. "Any new spending needs should be offset by spending cuts elsewhere or new revenues."
Zawya
23-04-2025
- Business
- Zawya
IMF says tariff pressures to push global public debt past pandemic levels
Economic pressures from steep new U.S. tariffs will push global public debt above pandemic-era levels to nearly 100% of global GDP by the end of the decade as slower growth and trade strain government budgets, the International Monetary Fund said on Wednesday. The IMF's latest Fiscal Monitor projected that global public debt will grow 2.8 percentage points to 95.1% of global GDP in 2025. It said the upward trend was likely to continue, reaching 99.6% of global GDP by 2030. Global public debt peaked in 2020 at 98.9% of GDP as governments borrowed heavily for COVID-19 relief and output shrank. Debt fell 10 percentage points within two years. But it has been edging back up and the latest forecast showed it accelerating. "Major tariff announcements by the United States, countermeasures by other countries, and exceptionally high levels of policy uncertainty, are contributing to worsening prospects and heightened risks," the IMF said in the report. It added that this leaves governments with more difficult trade-offs as their budgets are stretched by higher defense spending needs, demands for more social support and rising debt service costs that could grow with more inflationary pressures. Governments' annual fiscal deficits are forecast to average 5.1% of GDP in 2025, compared to 5.0% in 2024, 3.7% in 2022 and 9.5% in 2020, according to the report. SLOWER GROWTH, MORE DEBT The budget outlook is based on the IMF's "reference forecast" for 2.8% global GDP growth this year in its latest World Economic Outlook, which includes tariff developments through April 4. The economic outlook, as well as the fiscal outlook, would worsen if steeper tariffs from President Donald Trump and retaliatory measures kick in. Debt levels may rise above 117% by 2027 -- the level forecast in a severely adverse scenario -- "if revenues and economic output decline more significantly than current forecasts due to increased tariffs and weakened growth prospects." Debt at that level would represent the highest share of GDP since World War Two, the IMF said. Much of the debt growth is concentrated in larger economies, IMF Fiscal Affairs Director Vitor Gaspar told Reuters. About one third of the IMF's 191 member countries now have debt growing at rates faster than before the pandemic, but they make up about 80% of global GDP, he added. The rising pressures could prompt increasing demands for social spending, especially in countries vulnerable to severe disruptions from trade shocks, that could push spending higher, the report said. Adding to difficulties is a pullback in development aid by the U.S. and other wealthier countries, continuing a trend in recent years, "and that means that these countries will face even starker trade-offs than would otherwise be the case," Gaspar said. U.S. IMPROVEMENT-FOR NOW The IMF forecasts a slight improvement to U.S. annual budget deficits over the next two years to 6.5% of GDP for 2025 and 5.5% for 2026, compared to 7.3% for 2024. This was due to a combination of increased tariff collections based on announced measures as well as continued U.S. output growth. "So the performance of U.S. economy has been strong in recent years, and that helps the budget. It helps in the U.S., it helps everywhere," Gaspar said. But the U.S. forecast assumed that Republican tax cuts passed in 2017 expire at the end of the year as scheduled. The Trump administration wants to extend them, which budget experts said would add some $4 trillion to U.S. debt over a decade without offsets. China's fiscal deficits are expected to grow sharply in 2025, to 8.6% of GDP from 7.3% in 2024, settling at 8.5% in 2026. Economic stimulus spending was cited by the IMF as a reason that China's 2025 growth forecast held at 4%, partly offsetting a major output drag from tariffs. Despite the increase in debt pressures, the IMF doubled down on its advice to countries to prioritize public debt reductions to help build fiscal buffers to address future economic shocks, which will require a delicate policy balance. "Countries with limited room in government budgets should implement gradual and credible consolidation plans and allow automatic stabilizers, like unemployment benefits, to work effectively," the IMF said. "Any new spending needs should be offset by spending cuts elsewhere or new revenues." (Reporting by David Lawder; Editing by Cynthia Osterman)
