World public debt reaches historic heights, IMF announces
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World public debt reaches historic heights, IMF announces

Credit: Belga

The pandemic has pushed up the world public debt to a historic level in 2020, now representing 98% of global Gross Domestic Product (GDP), the International Monetary Fund (IMF) announced on Thursday.

That’s up from 84% in 2019, inflated by the governments’ aid plans in the face of the pandemic.

It is however a little less than the 101.5% of world gross domestic product estimated in July 2020, as world GDP proved to not be as “disastrous” as estimated at the time, an IMF spokesperson said.

The IMF pointed out that the total amount of government aid to combat the health and economic crisis caused by the Covid-19 pandemic amounts to $14,000 billion (roughly €11,542 billion), or $2,200 billion more than last October.

While helping to save lives, it “has posed a severe challenge to public finances,” the IMF said.

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Falling incomes combined with financial support schemes for households and businesses have increased public deficits and debts “beyond levels recorded during the global financial crisis.”

Budgetary support must continue until the economic recovery is fully entrenched, said the IMF, which in the past has urged instead that public debt be reduced.

The Fund has revised upwards its global growth forecast for 2021 to 5.5%, thanks to the acceleration of Covid-19 immunisation and massive government support.

However, the uncertainty surrounding its forecasts remains high due in particular to variants of the new coronavirus.

The Brussels Times