The International Monetary Fund (IMF) said in a report that it expects a significant increase in the debt-to-GDP ratio for the advanced economies by the end of 2021.
“Projections indicate that, by the end of 2021, debt as a share of GDP will be 18 percentage points higher than pre-pandemic levels for advanced economies,” the IMF said in a report.
The IMF also said it projects a 10 percent increase in the emerging markets, while low-income developing countries will face 6 percentage points of debt growth.
Higher deficits have been justified during the global health crisis, but have boosted gross financing needs and made countries more vulnerable to abrupt market changes, the report said.
“They have also reduced the available fiscal buffers for governments to address future crises or challenges,” the report added.
Countries should continue providing strong fiscal support in order to fight the health crisis until the recovery ends up on a strong footing, according to the report.