Global public debt edged up to 93% of Gross Domestic Product in 2023 and remained 9 percentage points above the pre-pandemic level.

According to the International Monetary Fund Fiscal Monitor, the increase was led by the two largest economies, United States and China, where debt rose by over 2 and 6 percentage points of GDP respectively.

These two economies, it said, also shape global fiscal developments and outlook.

“Slowing growth in China could weigh on global growth and trade, posing fiscal challenges for countries with strong trade and investment linkages. High and volatile government bond yields in the United States would lead to tighter financing conditions in the rest of the world”, it explained.

Moderate fiscal tightening, the Monitor said is expected to resume this year, but significant uncertainty remains.

In 2024, a record number of countries, home to more than half of the world’s population, are holding national elections. History shows governments tend to spend more and tax less during election years.

Deficits in election years tend to exceed forecasts by 0.4 percentage points of GDP, compared to non-election years. The IMF therefore wants governments to exercise fiscal restraint to preserve sound public finances in this great election year.

Global Economic Outlook Improves but.....

Meanwhile, the global economic and financial outlook has improved in the last six months.

Inflation has fallen, financial conditions have eased, and risks to the outlook are balanced. However, many countries continue to struggle with high public debt and fiscal deficits amid new challenges from high real interest rates and dimming medium-term growth prospects.

“Our latest Fiscal Monitor calls for governments to avoid slippages and focus more on rebuilding buffers and safeguarding fiscal sustainability over the medium term”.