Global public debt, which peaked at 99.7% of global GDP during the 2020 pandemic and recovered to 91.9% in 2022, will continue its upward path in 2023 and is on track to exceed 100% of GDP by the end of the decade It was progressing under the pressure of the USA and China. This was warned on Wednesday. International Monetary Fund (IMF), through the Director of Financial Affairs Department, Vitor Gaspar, at a press conference to present Financial Monitor report In Marrakech, where the annual meeting of the international organization is held.
“The risk of a systematic wave of sovereign debt defaults remains low,” according to the Monetary Fund.
As Gaspar explains, the following is expected: relationship between public debt and global GDP increase in rate one percentage point each year. If it were not for the pressure of the world’s two largest economies, the USA and China, this rate would decrease by approx. half a point each year. “But – added the IMF manager – it would be more meaningful to confirm that the increase in debt reflects a slowdown in growth, a rise in real interest rates and a budget deficit moving further into the red, partly reflecting rising borrowing costs.” The conclusion, according to Gaspar, is that “global public debt is now higher and is expected to grow much faster than in pre-pandemic forecasts.”
According to Vitor Gaspar, “while debt vulnerabilities and risks remain high and fiscal constraints are a very necessary component,” the IMF considers that “the risk of a systemic wave of sovereign debt defaults remains low.”
United States, China and Eurozone
In particular, the IMF predicts that: United States of America It will end 2023 with a deficit of 8.2% of GDP, almost two percentage points more than it calculated in April, and then with a small adjustment it will reduce the deficit to 7.4% of GDP in both 2024 and 2025, and in 2028. will place it at 7%. .
This will translate into a higher debt ratio, which will rise to 123.3% of GDP this year (one percentage point above the April forecast) and then continue to rise until it reaches 137.5% of GDP in 2028 will.
According to ChineseThe deficit will correct slightly this year – closing to 7.1% of GDP, four-tenths less than in 2022 – and grow again in 2024 (7%) and then again until it reaches 7.8% in 2028.
With this imbalance, its debt will rise to 83% of GDP this year, six percentage points more than in 2022, and will continue to grow until it exceeds 100% of GDP in 2027 and reaches 104.3% in 2028 .
on the set euro zoneHowever, there will be a decrease in the public deficit (from 3.4% of GDP expected in 2023 to 2.1% in 2028) and in the public debt (from 89.6% expected in 2023 to 84.9% in 2028). A gradual decrease is predicted.
For special occasion Spain, Public debt levels are expected to gradually decline from 107.3% of GDP expected in 2023 to 103.8% in 2028, with the public deficit expected to fall to 3% of GDP in 2024. It will rise again to 3.4% and remain stable there over the IMF’s forecast horizon to 2028.
The “terrible dilemma” created by the climate problem
In any case, from the IMF’s perspective, the key factor that will shape public finances in the coming years will be determined by how governments respond to the challenges of the energy transition against climate change. zero emissions.
According to estimates in the Fiscal Monitor report, the measures required to meet climate targets will lead to the accumulation of public debt in every country. Between 40 and 50 percent of GDP On the horizon of 2050.
to draw this “terrible dilemma”, The IMF advocates for the private sector to increase its resource contribution through the implementation of carbon pricing mechanisms such as those currently being designed by the European Union. According to the international organization, this could allow limiting the increase in public debt to between 10 and 15 percentage points of GDP in 2050.
“Delaying action on the carbon price would be too costly,” warns the organization that made the guidance Kristalina Georgieva. almost right now 50 countries There are already carbon pricing plans (the IMF says this will require further increases in rates) and more than 23 countries They are waiting for it to be introduced.
“But carbon pricing “generally unpopular”, accepts the IMF. To offset the increase in the cost of goods and services that the proliferation of carbon pricing systems could cause, the IMF advocates that governments design aid policies for groups. the most vulnerable families and companiesVitor Gaspar was recalled.