Africa-Press – Mozambique. The International Monetary Fund (IMF) said Wednesday that global public debt is expected to exceed 100% of the world’s gross domestic product (GDP) by 2029, to its highest since 1948.
“This reflects a higher and steeper path than projected before the (coronavirus) pandemic. In addition, the distribution of risks is wide and tilted toward debt accumulating even faster,” the IMF said in its Fiscal Monitor October report.
Additionally, it noted that with a 5% risk, public debt is expected to reach 123% of GDP by 2029.
For most major economies, the IMF said public debt exceeds 100% of GDP, or is on track to exceed that level.
The number of countries with public debt exceeding 100% of GDP is expected to gradually decrease over the next five years, and those countries are projected to increase their share of global GDP.
Canada, China, France, Italy, Japan, the UK and the US are among the G20 countries where public debt exceeds 100% of GDP. “These countries typically have deep and liquid sovereign bond markets and often broad policy choices, resulting in their fiscal risk considered moderate.”
In contrast, many emerging economies and low-income countries face tougher fiscal challenges, despite their relatively low debt.
“The number of countries with public debt below 60% of GDP increased to more than 100 in 2021 and is projected to continue to increase, although their GDP share in the world represents less than 30%,” it said.
The IMF noted that developing nations have few options for funding and policy. Despite having debt ratios that are frequently less than 60% of GDP, 55 countries are either in a debt crisis or at significant risk.
“When countries falter on debt, timely debt restructuring is critical to containing the damage,” it added.
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