International Monetary Fund (IMF). Photo: IMF
The International Monetary Fund (IMF) published the report on the sidelines of the annual meetings (Spring Meetings) being held by the World Bank Group and the IMF.
According to the report China and the US will lead the global debt trends in 2024 through 2029. In both economies, public debt is projected, under current policies, to nearly double by 2053.
The report said that global fiscal balance deficits increased by 1.6 percent to reach 5.5 percent of GDP on average in 2023 Table, and global public debt inched up by about two percent to 93.2 percent of GDP.
“With expenditures remaining virtually unchanged compared with 2022, a fall in revenues was the main driver of the uptick in fiscal deficits, as windfall revenues from inflation waned”, the report explained.
Fiscal deficit is the total sum of revenues and grants the government collected minus expenditure on goods and services, transfer payments, and net lending. It considers cash flows rather than accrual concepts of revenues and expenditures.
Fiscal tightening policies are anticipated to resume in 2024, albeit gradually, bringing the global deficit down to 4.9 percent of GDP.
Moreover, fiscal consolidation over the medium term is expected to remain modest, with the overall deficit projected to stabilize at 4.3 percent of GDP by 2029, about 0.7 percent higher than in 2019.
Regionally, the fiscal balance deficit of the Middle East and North Africa (MENA) region is projected to jump to 1.5 percent in 2024, up from 0.6 percent recorded in 2023, according to the report. It also expected the deficit rate to improve to 1.1 percent in 2025 and 2026, before inching up to 1.3 percent from 2027 to 2029.
Concerning the general government debt, the report projected emerging markets and middle-income economies; including Egypt, to reach the highest level in seven years. As per the report, these markets’ government debts will range between 70 percent, in 2024, and over 80 percent (2029) over the coming six years. The average recorded between 2019 and 2023 averaged 55 percent up to 69 percent, according to the report's data.
Egypt is currently under an Extended Fund Facility loan programme with total financing amounts to $8 billion till 2026. Under the program, Egypt has committed to bringing down its debt to below 80 percent by 2026, bringing down the double-digit inflation to seven percent by the end of 2024, ensuring foreign exchange sustainability, and unleashing the private sector potential to play a further and leading role in the country’s economic activity.
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