2024-01-14 23:34:45
Published15. January 2024, 00:34
Economy: The IMF fears budgetary slippages because of the elections
With half of the world’s population called to the polls this year, the director of the IMF is concerned about the risk of budgetary slippage in certain countries.
AFP
“Nearly 80 countries are going to have elections and we know what is happening, the pressure that exists to spend during electoral cycles,” recalled Kristalina Georgieva, who however stressed that “countries need to replenish their budgetary cushions and manage the debt that has accumulated” to deal with the various shocks since the Covid-19 pandemic.
The global economy was more solid than expected in 2023, estimated the head of the Fund, which allowed States to make savings, but the effort must continue while “the economy should experience an soft landing”, after the inflation peak observed over the last two years.
“Be prepared for uncertainties”
“The monetary policy being pursued is the right one, but the work is not finished. It is therefore important not to release it too quickly or too late but also not to have a budgetary policy going in a different direction, warned Kristalina Georgieva.
The year 2024 must be “a year where we apply the lessons learned in recent years: always being ready to face the unexpected. We must be ready for the uncertainties that will arise,” which requires margin in terms of public finances, which many states do not have after three years of repeated crises, she insisted.
Under these conditions, the IMF “works to help countries find the best measures to keep, what to continue, and where to focus their fiscal policy. Because if monetary policy remains restrictive, if budgetary spending increases, this will go against the objective of reducing inflation,” warned Kristalina Georgieva.
“The debt problem is becoming dramatic”
A necessity also insofar as the debt of all countries has increased significantly, creating difficulties in the most vulnerable countries, but also in several emerging countries, facing difficulties in repaying in a context of rising rates.
“We see that debt service (the annual cost of repaying borrowed capital and interest, editor’s note) has increased everywhere, but remains manageable in many countries, many have had the wisdom to modify the structure of their debt”, she detailed.
But “for certain countries the debt problem becomes dramatic, either because they become insolvent or because they have to spend a large part of their income on debt service”, limiting their ability to invest and finance services. essential.
(AFP)
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