Public duty higher and growing faster than predicted before the coronavirus pandemic, mainly due to USA And her Chinaof the two older economy peace, a senior official said on Wednesday International Monetary Fundreports Reuters.

It is predicted that in 60% of countries their ratio will decrease. state debt to GDP by 2028 after the surge caused by the pandemic, but a significant number of major economies, including Brazil, China and the United States, are seeing a rapid increase in the public debt-to-GDP ratio.

Its chief financial officer IMF, Vítor Gaspar, said that global public debt had risen to almost 100% of GDP in 2020 and by 2022 experienced the sharpest decline in 70 years, although it remains about 8 percentage points above pre-pandemic levels. Instead of normalizing this year, the rate is expected to start rising again, reaching 99.6 percent of GDP in 2028, the last year of the IMF’s projected year, Mr Gaspard said.

“There are a significant number of large advanced economies, large emerging economies, where public debt-to-GDP ratios are projected to rise rapidly, and this list of countries includes Brazil, China, Japan, South Africa, Turkey, the US and the UK. ” Gaspar told Reuters. “And the strongest effect comes from the two largest economies (including the US and China),” he added.

A significant number of major economies, including Brazil, China, and the United States, are experiencing rapid increases in public debt-to-GDP ratios.

In contrast, in low-income developing countries, the increase in the debt ratio during the pandemic has been very modest and is now expected to fall to pre-pandemic levels in the coming years, he stressed. Tightening budget constraints and food insecurity have stalled poverty reduction and are hindering further progress towards the United Nations’ sustainable development goals, according to the IMF’s Fiscal Monitor report.

In the future, all countries should respect their anti-inflationary monetary policies and create “airbags” that could be used in the event of a crisis, Mr. Gaspard also said, stressing that countries without sufficient “cushions” » will suffer the biggest downturns in the event of a crisis.

An IMF report says recent banking turmoil in the US and Switzerland has increased risks of an extension, Reuters reported. financial crisis, which will put even more pressure on public sector balance sheets if governments are forced to intervene. To guard against further challenges, regulators should consider strengthening their crisis management structures and regimes to deal with troubled institutions. Since financial risks were limited, the battle against him inflation was a top priority, he said, adding that tighter fiscal policy could curb demand, reducing the need for more aggressive hikes. interest rates.

Its concern about the impact of higher interest rates on the banking system and global development pointed out, in turn, the chief economist of the IMF, Pierre-Olivier Gurinhas. He warned that the increase in interest rates exposed the vulnerability of banks, whose reaction is a serious risk to global growth. “We are concerned about what we are seeing in the banking sector, especially in the US, but also in other countries, as well as the impact on economic growth in 2023,” Mr. Gurrinhas said, referring to CNBC. Higher interest rates by central banks have pushed up the cost of funding for banks, while financial institutions have lost assets, mostly long-term bonds. “ banks they are in a more dangerous position. They have healthy cushions, but the overall situation will force them to be more careful and perhaps reduce their lending somewhat,” he stressed.

Financial stability has been in the spotlight in recent months amid the collapse of several US banks, selling Credit Suisse and the turmoil in the UK bond market last autumn. Mr. Gurrinhas noted on CNBC that the debate around interest rate hikes by the central bank has shifted from growth versus inflation to financial stability versus inflation.