The International Monetary Fund expects an increase in global debt due to pressure exerted by the United States and China

International Monetary Fund (International Monetary Fund(He warned on Wednesday that global public debt will grow again this year, mainly due to pressures from… United States (USA) and ChinaA trend that will continue in the medium term with a one-point annual increase in global GDP.

Along with this pressure from large economies, the increase in debt is also linked to slower growth, higher interest rates and a growing fiscal deficit, according to the fiscal monitoring report presented by the International Monetary Fund on Wednesday.

The organization expects the United States to end 2023 with a deficit of 8.2% of GDP, nearly two points larger than it calculated in April, and that it will then see a slight correction to the gap position at 7.4% of GDP in each of 2024. Like the year 2025.

This will translate into a higher debt ratio, which will rise to 123.3% of GDP this year, more than one point higher than April estimates, and then continue to rise until it reaches 137.5% of GDP in 2028.

As for China, its deficit will correct slightly this year – when it will close at 7.1% of GDP, four-tenths lower than in 2022 – and in 2024 (7%) and then grow again in 2025, when it reaches 7.3%. .

With this imbalance, its debt will rise this year to 83% of GDP, six points more than it was in 2022, and it will continue to grow until it exceeds 100% of GDP in 2027.

– Difficulty balancing public accounts

In the introduction to the report, IMF Director of Fiscal Affairs Vitor Gaspar acknowledges the difficulty countries face in balancing their public accounts, due to a combination of high debt, high interest rates, and increased expectations about what the country should do. And “aversion” to taxes, which leads to political red lines.

This has led to situations ranging from inability to pay bills in some countries to an unsustainable spending path due to maintaining existing policies, as happens in “big and rich” countries.

In any case, most countries will have to implement more restrictive budgetary policies to help central banks in their fight against inflation, rebuild fiscal margins and avoid risks.

The IMF’s Assistant Director for Fiscal Affairs, Ira Dabla Norris, adds in an interview with EFE that the size of fiscal consolidation “will depend on the fiscal space available” in each country.

He defends this by saying: “Support measures have helped households and businesses adapt to higher energy and food prices, but should be withdrawn gradually” as inflation moderates.

However, targeted transfers can be made to protect vulnerable households from rising energy prices.

In the case of China, Vitor Gaspar, in a meeting with the press on Wednesday in Marrakesh to present the financial monitoring report, explained that he “will not focus on public debt, as the biggest challenge is growth, stability and innovation.”

Director of the Department Financial affairs of the International Monetary Fund He believes that China must change its development model, from an export-based economy to domestic demand, infrastructure investment and real estate innovation, among other things.