IMF urges countries to urgently reduce deficits and debt — Channel NewsAsia

The International Monetary Fund, in Bangkok, Thailand, called on advanced countries and other economies to urgently reduce public spending, budget deficits and debt burdens. As Channel NewsAsia reports , the fund warned that further delays would make fiscal adjustment more painful in the coming years. Rising borrowing costs IMF Fiscal Affairs Department Director Rodrigo Valdes said that rising government bond yields are increasing pressure on public finances. According to him, the average level of public debt is approaching 100% of GDP, the highest level since World War II. Valdes noted that fiscal outcomes this year proved worse than expected six months and one year ago. At the same time, most countries are considering increasing spending rather than strengthening fiscal discipline. Debt is becoming more expensive The IMF forecasts that the average effective cost of government financing will rise to 3.7% in 2031, compared with 2.3% in 2021. In the United States, interest payments on debt, according to the fund's estimate, will reach 5.3% of GDP, compared with 2.8% before the COVID-19 pandemic; this will roughly match projected spending on Social Security. More current news is available on the UA.News Telegram channel Telegram . In low-income countries, interest payments already absorb more than 15% of tax revenue, while the average stood at about 9% in 2011–2019. The IMF called on such states to strengthen tax systems and improve spending efficiency. Pressure on budgets According to the IMF, the average yield on 10-year government bonds in G7 countries rose by more than 110 basis points between February and September, reaching the highest level in nearly two decades. The fund links this to high oil prices, persistent inflation, stronger investment demand and faster-than-expected progress in artificial intelligence. The fund also noted that broad measures to shield households from higher energy prices collectively cost about 0.5% of global GDP. Their extension, according to Valdes's estimate, will contribute to further price growth worldwide.