IMF expects that the ratio of global public debt to GDP will rise to 99.6 percent by 2028

The IMF published the April issue of its Financial Monitoring Report with the title “On the Path to Normalization of Policy”.

In the three years since the outbreak of the COVID-19 outbreak, fiscal policy has returned to normal, the report noted.

In the report, it was stated that, after the extraordinary support provided in 2020, both monetary and fiscal policies tightened in 2022 due to high inflation and the expiration of the epidemic-related spending measures in approximately three-quarters of the countries, it was stated that this change occurred in a highly volatile environment.

“As economies rapidly recover from a deep recession related to Covid-19 with ongoing financial tensions, governments face the cost of living crisis, the Russian invasion of Ukraine and financial sector instability,” the report said. evaluation was made.

US and China shaping global public debt trends

Pointing out that public finances have experienced major fluctuations reflecting unprecedented shocks and government actions, the report said that since the end of exceptional measures after the historic increase in public debt, which reached nearly 100 percent of GDP in 2020 as a result of economic contraction and massive government support, the financial deficits were recorded.

With strong nominal GDP growth in 2021-2022, global debt dropped the steepest in 70 years, falling to 92.1 percent of GDP at the end of 2022, but still around 8 percentage points above the end-2019 level, the report said.

In the report, it was stated that the ratio of global public debt to GDP is expected to increase to 93.3 percent this year and to 94.6 percent in 2024.

In the report, which stated that the ratio of public debt to GDP is estimated to increase to 99.6 percent in 2028, it was stated that the developments in the US and Chinese economy shaped the global public debt trends.

It was stated in the report that the ratio of the US public debt to GDP is expected to increase to 136.2 percent by 2028, while the ratio of China’s public debt to GDP is estimated to rise to 104.9 percent in the same period.

In the report, the ratio of Turkey’s public debt to GDP is 35 percent in 2023, 36.7 percent in 2024, 37.7 percent in 2025, 38.8 percent in 2026, 40.4 percent in 2027 and 40.4 percent in 2027. It was recorded that it is expected to be 42.3 percent in 2028.

Near-term financial outlook remains complex

“The near-term financial outlook remains complex, and it is critical that fiscal and monetary policies be closely aligned to respond to an uncertain economic environment and rapidly changing financial conditions, while ensuring price and financial stability,” the IMF’s report said. evaluation was made.

The overall fiscal deficits to GDP ratio is expected to rise to 5 percent in 2023, as governments face higher interest bills and pressures to increase public spending.

Emphasizing that the risks are on the downside, the report said, “If the instability in the financial sector gets worse, it may also put pressure on the public sector balance sheets as governments can be called for help.” evaluation was made.

“In the medium term, fiscal deficits are projected to remain above pre-pandemic levels over the next few years,” the report said. expression was used.

The IMF report stressed that governments will need to prioritize rebuilding fiscal buffers, developing credible, risk-based fiscal frameworks that promote coherent macroeconomic policies, reduce debt vulnerabilities over time, and create the necessary space to deal with future shocks.

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