The International Monetary Fund (IMF) has opined that decisive government actions are required to ensure swift and extensive vaccine rollout, protect the most vulnerable households and otherwise viable firms, and foster a durable and inclusive recovery.
In a blog by the international body, Mr. Vitor Gaspar, Director of the IMF’s Fiscal Affairs Department stated that “The COVID-19 pandemic is accelerating in many countries and uncertainty is unusually high,” while adding that “global cooperation on producing and widely distributing treatments and vaccines to all countries at low cost is crucial.”
“The sooner the global pandemic ends, the quicker economies can return to normal and people will need less government support, ” the IMF Fiscal Affairs Department Chief remarked.
The updated IMF Fiscal Monitor revealed that global fiscal support touched nearly $14 trillion by the end of December 2020, up by approximately $2.2 trillion since October 2020.
“COVID-19 was an enormous disturbance to all countries around the world. Tax revenues have shrunk quite substantially,” Mr. Gaspar told the media, calling such fast and strong fiscal actions “absolutely necessary” to help contain the pandemic and to avoid a financial crisis.
The IMF report stated that fiscal support coupled with an economic contraction that has resulted in lower revenues have led to the rise of public debt and deficits. Average public debt worldwide touched 98 percent of gross domestic product (GDP) by the end of 2020, compared to 84 percent projected pre-pandemic for the same date.
Answering the media on whether policymakers should be concerned about the ballooning public debt, Mr. Gaspar remarked that one has always to be concerned about proper management of public finance risks, and to bear in mind public debt sustainability, but at this point in time, “the very first priority is to defeat the pandemic”.
The IMF Fiscal Affairs Department Chief urged policymakers to strike a “balance” between providing more short-term support to ensure a solid recovery and keeping debt at a manageable level over the longer term.