International Monetary Fund expects India's role to expand in Indo-Pacific region

Elias Hubbard
April 22, 2018

"One hundred and sixty-four trillion is a huge number", Vitor Gaspar, head of the IMF's fiscal affairs department, said in an interview.

"An honest accounting finds U.S. debt headed to shockingly high levels", he said, as quoted by CNBC.

"Increasingly we see instances where low Income countries have borrowed excessively, and unsustainably, from large, often non-transparent emerging sovereign creditors like China or private creditors", he said.

"Public debt is now at historic highs in advanced and emerging market economies".

".But it is important to recall that these peaks involve debt levels that countries were unable to service and were eventually tackled through debt relief initiatives by the worldwide community", said Gasper.

"We urge policymakers to avoid procyclical policy actions that provide unnecessary stimulus when economic activity is already pacing up", Gaspar said.

"The concern that has been expressed, and it's a legitimate one, is that debt levels in those countries are at 55 per cent of GDP which is very high but Nigeria's is at less than 20".

The finance minister insisted that Nigeria is "not one of the countries they (IMF) have expressed concerns about, however, we will continue to manage our debt very, very responsibly".

She was responsidng to the World Bank comments on helping to monitor Nigeria's debt levels.

Mnuchin said the rise of official bilateral, "plurilateral", and private creditor lending, especially to countries at high risk of debt distress, is complicating debt resolution processes necessary to re-establish debt sustainability. "This ratio doubled in five years", he said. It also cautioned about the record-high $164 trillion in world debt.

The interest burden has also doubled in the past 10 years to 20 per cent of taxes.

The IMF had raised alarm that the country's debt profile is raising.

The US debt-to-GDP ratio is projected to jump to 116.9 percent by 2023, leaving behind Italy, according to the International Monetary Fund (IMF).

Clear restructuring rules do not exist for these cases, creating the risk of a complicated restructuring process, creditor losses, and a decline in real median incomes in the debtor country, the Treasury Secretary rued.

"In the U.S., the revised tax code and the two-year budget agreement provide additional fiscal stimulus to the economy". Among major economies, Japan had the highest debt-to-GDP level previous year, at 236 percent, followed by Italy at 132 percent and the 108 percent.

If tax cuts with sunset provisions are not allowed to lapse, public debt would climb even higher, it predicted.

Other reports by Click Lancashire

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