Massive fiscal response pushes global public debt to record high level: IMF – Times of Oman

Massive fiscal response pushes global public debt to record high level: IMF – Times of Oman

Washington: The ongoing COVID-19 pandemic has already prompted an "unprecedented" fiscal policy response of close to $11 trillion worldwide, pushing the global public debt to reach record high level, the International Monetary Fund (IMF) said.

"In the face of a sharp decline in global output, a massive fiscal response has been necessary to increase health capacity, replace lost household income and prevent large-scale bankruptcies," Vitor Gaspar, director of the IMF's Fiscal Affairs Department and Gita Gopinath, IMF chief economist, wrote in a blog.

"But the policy response has also contributed to global public debt reaching its highest level in recorded history, at over 100 per cent of global GDP (Gross domestic product), in excess of post-World War II peaks," they noted.

Gaspar and Gopinath said the need for continued fiscal support is "clear" as countries gradually reopen from the lockdown, "but this begs the question of how countries can finance it without debt becoming unsustainable."

In 2020, relative to the IMF's January World Economic Outlook, fiscal deficits are expected to be more than five times higher in advanced economies and to more than double in emerging market economies, leading to an unprecedented jump in public debt of respectively 26 and 7 percentage points of