News Investigators/ is The International Monetary Fund (IMF) says global public debt is projected to grow above 100 per cent of Gross Domestic Product (GDP) by 2029.
The Director of the Fiscal Affairs Department, IMF, Vitor Gaspar, gave the projection on Wednesday in Washington while presenting the fund’s fiscal monitor.
According to Mr Gaspar, in such a scenario, public debt would be at its highest level since 1948.
“In the fiscal monitor, we project global public debt to go above 100 per cent of GDP by 2029. Public debt risks are widespread and tilted towards debt accumulating even faster.
” Policymakers must act now to keep debt under control and contain debt risks.” he said.
He said that the years between the global financial crisis and the COVID-19 pandemic were marked by unusually easy conditions for sustaining debt.
He, however, said that rising debt was usually accompanied by falling interest rates, leading to an overall stable interest bill on budget.
“The situation is now starkly different. Interest rates have increased considerably in global markets, and their path forward is highly uncertain.
“After years of rising debt and falling interest rates, the environment has changed dramatically. Interest rates have increased; financial asset valuations have stretched.
“The greatest concern is financial turmoil, driven by fiscal financial feedback loops,” he said.
Mr Gaspar said that it was time for countries to mobilise fiscal policy to deliver debt sustainability and create buffers against future adverse shocks.
Accordimg to him, prioritising fiscal policy is essential to support debt sustainability and prepare fiscal buffers to use in case of severe adverse shocks including financial crises.
“Fiscal policy should ensure debt sustainability and create buffers against future adverse shocks and heighten uncertainty. While the politics challenges are significantly.
“The solutions lie in improving growth prospects and strengthening the trust in the government.
“Better governance and institutions are key. They support both public trust and economic growth,” he said.
The News Agency of Nigeria (NAN) reports that the Fiscal Monitor explores how governments can improve economic growth prospects by enhancing the efficiency and composition of public spending.
It suggests that redirecting public spending towards infrastructure, education, health, and research and development, without increasing overall spending, can deliver significant long-term gains in output.
It also said that closing gaps in efficiency can further magnify these gains, with institution-building being the most effective strategy.
The analysis provides new global and time-varying datasets of public spending efficiency and rigidity.
NAN