IMF: savings for Greece, high global debt

An increase in the primary surplus of Greece’s general government from 0.1% last year to 1% this year and to 2% in 2024, as well as a further reduction in public debt, according to the International Monetary Fund’s report on global fiscal developments (Fiscal Monitor).

The primary surplus is projected to rise to 2.2% in 2026 and remain at that level through 2028.

For the general government’s overall balance, which includes interest payments on public debt, the deficit is expected to decline from 2.3% last year to 1.6% this year and further to 0.8% in 2024.

The reduction in the deficit will result from a greater reduction in public spending relative to the reduction in public revenue.

Public spending is expected to decline from 52.5% of GDP last year to 48.9% this year and further to 47.1% in 2024, while public revenue is projected to decrease from 50.2% to 47.3% and 46.4%, respectively.

General government debt is projected to decline from 178.1% of GDP last year to 168% this year and to 160.2% in 2024, and to continue declining in the coming years, falling to 145.3% in 2028.

Global debt is high

The IMF states that most countries need to implement stricter fiscal policies, not only to rebuild safety reserves and limit fiscal risks, but also to support central banks’ efforts to bring inflation back to their target.

It notes that debt levels are generally high around the world during a period of rising interest rates.

Global public debt is expected to rise in 2023, due to its upward trend in the world’s two largest economies, the U.S. and China. In the medium term, it is expected to rise by about one percentage point, but excluding the two largest economies, it will decline by about half a percentage point annually.

At the projected rate of growth, global debt will reach 100% of GDP by the end of the decade. In developed economies, it averaged 112.3% last year and is expected to reach 116.3% in 2028.

Countries with limited fiscal space, low tax capacity, or an inability to raise funds from the markets should prioritize spending cuts, such as eliminating fuel subsidies, according to the IMF.