"IMF says US, China debt pose risks for global public finances"

" IMF says US, China debt pose risks for global public finances \r\n\r\nThe world\u2019s two great economic rivals, China and the US, will drive much of the increase in global public debt over the next five years, with US spending creating trouble for many other countries by keeping interest rates high, officials at the International Monetary Fund said in a report.\r\n\r\n\u201cIn both economies, public debt is projected under current policies to nearly double by 2053,\u201d the IMF said in its Fiscal Monitor, an overview of global public finance developments. \u201cHow these two economies manage their fiscal policies could therefore have profound effects on the global economy and pose significant risks for baseline fiscal projections in other economies.\u201d\r\n\r\nHigher interest rates in the US make life difficult for many countries by strengthening the value of the US dollar against other currencies, making dollar-priced commodities more expensive and increasing debt burdens for countries that have borrowed in the US currency.\r\n\r\n\u201cHigh and uncertain interest rates in the US affect the cost of funding elsewhere in the world,\u201d Vitor Gaspar, director of fiscal affairs at the IMF, said in an interview. \u201cThe impact is quite significant.\u201d\r\n\r\nAs for China, the fund warned that a larger-than-expected slowdown in China \u2014 \u201cpotentially exacerbated by unintended fiscal tightening given significant fiscal imbalances in local governments\u201d \u2014 can create risks for the rest of the world through lower levels of international trade, external financing and investments.\r\n\r\nThe report projected overall primary deficits would decline to 4.9% of global GDP from 5.5% in 2023, but with substantial risks threatening public finances in many countries.\r\n\r\nThe fund noted that voters this year will go to the polls in 88 economies representing more than half of the world\u2019s population and GDP, in what has been termed the \u201cgreat election year.\u201d\r\n\r\n\u201cSupport for increased government spending has grown across the political spectrum over the past several decades, making this year especially challenging,\u201d the report said. \u201cFiscal policy tends to be looser, and slippages larger, during election years.\u201d"

"IMF says US, China debt pose risks for global public finances"

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