IMF warns ‘more frequent and more devastating fiscal crises around the world’

The International Monetary Fund (IMF) has warned of a global financial crisis, but this only underscores the need for developed countries to help poor countries with more “orderly debt restructuring”.

Many of these countries are experiencing rising debt levels and mounting fiscal pressures, pushing the poorest citizens out, according to IMF Fiscal Director Vitor Gaspard, who spoke at the IMF and World Bank annual meetings. can lead to great social unrest among

“The rise of extreme poverty and food insecurity that began before the pandemic should be addressed at the global level by a wide range of initiatives,” declared Gaspard, adding that the current situation is exacerbated by food and energy shortages and climate change. I said yes.

Gaspar also called for countries to implement fiscal measures aimed at those most in need, as well as to enact policies to reduce domestic demand in times of energy scarcity.

“Faced with high debt levels and rising borrowing costs, policymakers should prioritize targeted assistance to the most vulnerable through social safety nets,” the IMF said in a blog post. I’m here.

The head of the IMF’s fiscal affairs also emphasized that additional efforts are needed to reduce the accumulated debt of vulnerable countries.

Fiscal Responsibility and Global Debt Relief

On the other hand, the financial fund’s latest financial monitor Released October 13, the report looks at how global policymakers can protect low-income households from financial ruin while maintaining a tight fiscal stance to help fight inflation. It shows the problem you are facing.

Despite the economic slowdown this year, inflationary pressures have remained stubbornly persistent and more widespread than expected.

Rising global inflation has led to lower living standards around the world, and many governments have introduced various fiscal relief measures to stave off dissatisfaction.

“With inflation rising and financial conditions tightening, policymakers should prioritize macroeconomic and financial stability above all else,” the IMF warned.

The IMF report found that massive government spending to cushion rising costs would put undue pressure on central banks to raise interest rates further, exacerbating existing government deficits and perpetuating the inflationary cycle. I point out that there are

Many countries offer benefits to struggling citizens, including energy price subsidies, tax cuts and cash transfers. All of these are estimated to contribute at least 0.6% of gross domestic product (GDP) on average.

“This is particularly important because recent bond market developments have demonstrated increased market sensitivity to deterioration (or deterioration) in fundamentals. more likely to become a target,” the report said.

“But they must also maintain a tight fiscal stance to reduce vulnerability due to high public debt and to ensure that fiscal policy does not serve a cross purpose with monetary policy in response to high inflation.” continued.

The IMF said global public debt will remain high at 91% of GDP this year, with developing countries projected to be the most vulnerable to financial crises.

Debt has fallen from its historic high in 2020, but remains 7.5% above pre-pandemic levels.

The report also says that 60% of the poorest countries are currently or facing a debt crisis.

China, the G-20, and global monetary policy

Meanwhile, according to Reuters, there is growing criticism around the world for China’s failure to participate in the issue.

The West is hesitant about moving to restructure Zambia and Chad’s debt after China, the world’s largest sovereign creditor, agreed to help settle the debt at the G20 summit in late 2020. I feel irritated by

At an event hosted by the Bretton Woods Commission, Treasury Secretary Janet Yellen said implementation of the agreed G20 framework was “very disappointing” and “simply not working,” according to Reuters.

Yellen accused China of “not participating” enough in efforts to help countries in dire financial straits after asking the G20 for help.

“We urge China to step up. The situation is getting very serious,” Yellen said.

Beijing has said it will not join the bailout plan unless the IMF or the World Bank themselves take more financially responsible policies.

“They are preferred creditors, and we think it’s important to maintain that position,” Yellen replied, referring to the two financial institutions’ objectives and frameworks.

Gaspar said: Be prepared for a shockable world. “

Reuters contributed to this report.