Global public debt to rise ‘modestly’ after US$14 trillion spent to tackle coronavirus economic damage, IMF says

Global public debt is set to reach 99.5 per cent of global gross domestic product (GDP) in 2021, up slightly from 97.6 per cent at the end of 2020, says the International Monetary Fund (IMF)

Its Fiscal Monitor Update also estimates that gross-debt-to-GDP ratio soared to 122.7 per cent in 2020 for advanced economies on average from 104.8 per cent in 2019

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China, the world’s second largest economy, is the main driver of overall debt in the emerging markets category after last year Beijing unleashed a flurry of stimulus measures to revive its coronavirus-hit economy. Photo: Xinhua

Published: 9:00pm, 28 Jan 2021Updated: 11:15pm, 28 Jan 2021

Global public debt is set to rise “modestly” in 2021 after some US$14 trillion was spent last year to tackle economic damage from the coronavirus pandemic, according to the International Monetary Fund (IMF).

The IMF estimated in its “Fiscal Monitor Update” published on Thursday that global public debt is set to reach 99.5 per cent of gross domestic product (GDP) in 2021, up slightly from 97.6 per cent at the end of 2020.

Governments around the world used the money to support their virus-hit economies, but because of declining revenue from economic contraction, these measures have also led to a rise in public debt and deficits, which are more pronounced in advanced economies.

The IMF said in the report that advanced economies recorded the largest increases in fiscal deficits and debt, reflecting both higher spending and declines in revenue, while in emerging markets, the rise in deficits stemmed largely from depressed tax receipts due to the economic recession.

The IMF estimates that gross government debt-to-GDP ratio soared to 122.7 per cent in 2020 for advanced economies on average from 104.8 per cent in 2019.