The International Monetary Fund is facing criticism from its independent watchdog over inconsistencies in its handling of major bailouts.

A new report highlights concerns about political pressures influencing decisions on large loans to countries like Argentina, Ukraine, and Egypt.

The International Monetary Fund’s independent watchdog has raised concerns over the IMF's handling of its largest bailouts over the past two decades.

The report highlights inconsistencies in loan decisions for countries like Argentina, Ukraine, and Egypt, attributing these to potential political pressures.

Argentina alone has received $44 billion since 2018 under the IMF’s exceptional access policy, designed for outsized loans exceeding normal limits.

The watchdog warns that these policies risk damaging the IMF’s credibility, delaying debt resolution, and failing to attract private investment as intended.

IMF chief Kristalina Georgieva acknowledged the need for a policy review but emphasised maintaining flexibility to avoid weakening market confidence.

The IMF’s exceptional access policy, introduced in 2002, was meant to regulate large, high-risk bailouts.

However, a review of cases from 2002 to 2023 shows mixed results. Argentina, currently seeking another $10 billion loan, is one of the IMF’s largest borrowers.

In, 2018 it tapped a $44 billion bailout, which it struggled to repay, even using a renminbi swap line with China.

Similarly, Ukraine’s IMF support is critical for financing its war effort, while Egypt's recent bailout aimed to stabilise its economy amid regional conflicts.

The watchdog found that these large loans often rest on assumptions rather than solid analysis, raising doubts about their effectiveness and fairness.

According to the IMF’s independent evaluation office, political pressures may be influencing major bailouts, compromising the fund's even-handedness.

The report notes that large shareholders, such as the US and China, often play a role in these high-stakes decisions.

The IMF has been criticised for approving large loans based on political assurances, such as promises of spending cuts, which are not always delivered. In some cases, these bailouts delay rather than solve debt issues.

While IMF reforms have reduced surcharge rates on large loans, the watchdog warns that inconsistent policies risk undermining trust in the fund.

Georgieva agreed to review the policies but cautioned against changes that could hurt market confidence.

(With inputs from the agencies)

The International Monetary Fund is facing criticism from its independent watchdog over inconsistencies in its handling of major bailouts. A new report highlights concerns about political pressures influencing decisions on large loans to countries like Argentina, Ukraine, and Egypt.

The International Monetary Fund is facing criticism from its independent watchdog over inconsistencies in its handling of major bailouts. A new report highlights concerns about political pressures influencing decisions on large loans to countries like Argentina, Ukraine, and Egypt. The International Monetary Fund’s independent watchdog has raised concerns over the IMF's handling of its largest bailouts over the past two decades. The report highlights inconsistencies in loan decisions for countries like Argentina, Ukraine, and Egypt, attributing these to potential political pressures. Argentina alone has received $44 billion since 2018 under the IMF’s exceptional access policy, designed for outsized loans exceeding normal limits. The watchdog warns that these policies risk damaging the IMF’s credibility, delaying debt resolution, and failing to attract private investment as intended. IMF chief Kristalina Georgieva acknowledged the need for a policy review but emphasised maintaining flexibility to avoid weakening market confidence. The IMF’s exceptional access policy, introduced in 2002, was meant to regulate large, high-risk bailouts. However, a review of cases from 2002 to 2023 shows mixed results. Argentina, currently seeking another $10 billion loan, is one of the IMF’s largest borrowers. In, 2018 it tapped a $44 billion bailout, which it struggled to repay, even using a renminbi swap line with China. Similarly, Ukraine’s IMF support is critical for financing its war effort, while Egypt's recent bailout aimed to stabilise its economy amid regional conflicts. The watchdog found that these large loans often rest on assumptions rather than solid analysis, raising doubts about their effectiveness and fairness. According to the IMF’s independent evaluation office, political pressures may be influencing major bailouts, compromising the fund's even-handedness. The report notes that large shareholders, such as the US and China, often play a role in these high-stakes decisions. The IMF has been criticised for approving large loans based on political assurances, such as promises of spending cuts, which are not always delivered. In some cases, these bailouts delay rather than solve debt issues. While IMF reforms have reduced surcharge rates on large loans, the watchdog warns that inconsistent policies risk undermining trust in the fund. Georgieva agreed to review the policies but cautioned against changes that could hurt market confidence. (With inputs from the agencies)

IMF criticised for inconsistent bailouts, calls for policy overhaul

New Delhi
The International Monetary Fund is facing criticism from its independent watchdog over inconsistencies in its handling of major bailouts.
A new report highlights concerns about political pressures influencing decisions on large loans to countries like Argentina, Ukraine, and Egypt.
The International Monetary Fund’s independent watchdog has raised concerns over the IMF's handling of its largest bailouts over the past two decades.
The report highlights inconsistencies in loan decisions for countries like Argentina, Ukraine, and Egypt, attributing these to potential political pressures.
Argentina alone has received $44 billion since 2018 under the IMF’s exceptional access policy, designed for outsized loans exceeding normal limits.
The watchdog warns that these policies risk damaging the IMF’s credibility, delaying debt resolution, and failing to attract private investment as intended.
IMF chief Kristalina Georgieva acknowledged the need for a policy review but emphasised maintaining flexibility to avoid weakening market confidence.
The IMF’s exceptional access policy, introduced in 2002, was meant to regulate large, high-risk bailouts.
However, a review of cases from 2002 to 2023 shows mixed results. Argentina, currently seeking another $10 billion loan, is one of the IMF’s largest borrowers.
In, 2018 it tapped a $44 billion bailout, which it struggled to repay, even using a renminbi swap line with China.
Similarly, Ukraine’s IMF support is critical for financing its war effort, while Egypt's recent bailout aimed to stabilise its economy amid regional conflicts.
The watchdog found that these large loans often rest on assumptions rather than solid analysis, raising doubts about their effectiveness and fairness.
According to the IMF’s independent evaluation office, political pressures may be influencing major bailouts, compromising the fund's even-handedness.
The report notes that large shareholders, such as the US and China, often play a role in these high-stakes decisions.
The IMF has been criticised for approving large loans based on political assurances, such as promises of spending cuts, which are not always delivered. In some cases, these bailouts delay rather than solve debt issues.
While IMF reforms have reduced surcharge rates on large loans, the watchdog warns that inconsistent policies risk undermining trust in the fund.
Georgieva agreed to review the policies but cautioned against changes that could hurt market confidence.
(With inputs from the agencies)

The International Monetary Fund is facing criticism from its independent watchdog over inconsistencies in its handling of major bailouts. A new report highlights concerns about political pressures influencing decisions on large loans to countries like Argentina, Ukraine, and Egypt.



New Delhi The International Monetary Fund is facing criticism from its independent watchdog over inconsistencies in its handling of major bailouts. A new report highlights concerns about political pressures influencing decisions on large loans to countries like Argentina, Ukraine, and Egypt. The International Monetary Fund’s independent watchdog has raised concerns over the IMF's handling of its largest bailouts over the past two decades. The report highlights inconsistencies in loan decisions for countries like Argentina, Ukraine, and Egypt, attributing these to potential political pressures. Argentina alone has received $44 billion since 2018 under the IMF’s exceptional access policy, designed for outsized loans exceeding normal limits. The watchdog warns that these policies risk damaging the IMF’s credibility, delaying debt resolution, and failing to attract private investment as intended. IMF chief Kristalina Georgieva acknowledged the need for a policy review but emphasised maintaining flexibility to avoid weakening market confidence. The IMF’s exceptional access policy, introduced in 2002, was meant to regulate large, high-risk bailouts. However, a review of cases from 2002 to 2023 shows mixed results. Argentina, currently seeking another $10 billion loan, is one of the IMF’s largest borrowers. In, 2018 it tapped a $44 billion bailout, which it struggled to repay, even using a renminbi swap line with China. Similarly, Ukraine’s IMF support is critical for financing its war effort, while Egypt's recent bailout aimed to stabilise its economy amid regional conflicts. The watchdog found that these large loans often rest on assumptions rather than solid analysis, raising doubts about their effectiveness and fairness. According to the IMF’s independent evaluation office, political pressures may be influencing major bailouts, compromising the fund's even-handedness. The report notes that large shareholders, such as the US and China, often play a role in these high-stakes decisions. The IMF has been criticised for approving large loans based on political assurances, such as promises of spending cuts, which are not always delivered. In some cases, these bailouts delay rather than solve debt issues. While IMF reforms have reduced surcharge rates on large loans, the watchdog warns that inconsistent policies risk undermining trust in the fund. Georgieva agreed to review the policies but cautioned against changes that could hurt market confidence. (With inputs from the agencies)

The IMF's watchdog has raised concerns over the fund's handling of major bailouts, including those for Argentina, Ukraine, and Egypt, citing political pressures and inconsistencies in loan decisions. The report questions the effectiveness of the IMF's exceptional access policy, warning that large loans risk damaging the fund's credibility and delaying debt resolution.

IMF Bailouts Under Fire For Political Bias

The IMF's watchdog has raised concerns over the fund's handling of major bailouts, including those for Argentina, Ukraine, and Egypt, citing political pressures and inconsistencies in loan decisions. The report questions the effectiveness of the IMF's exceptional access policy, warning that large loans risk damaging the fund's credibility and delaying debt resolution.



Sri Lanka's new leftist government has agreed to press ahead with a controversial IMF bailout program that involves tough austerity and economic reforms, the international lender announced Saturday.

The International Monetary Fund said it reached an agreement with President Anura Kumara Dissanayake's administration to continue with the four-year loan negotiated by his predecessor last year.

"The authorities have committed to staying within the guardrails of the programme," IMF team leader Peter Breuer told reporters at the end of talks with the new government.

He said the new government's commitment ensured policy continuity.

"Sustaining the reform momentum is critical to safeguarding the hard-won gains of the programme, and putting the economy on a path towards lasting recovery and stable and inclusive growth," Breuer added.

Sri Lanka went to the IMF for a rescue package after the country defaulted on its $46 billion external debt in April 2022 during an unprecedented economic meltdown.

<a href="https://www.wionews.com/south-asia/sri-lanka-president-dissanayake-retains-defence-and-finance-in-new-cabinet-777192">Also read:&nbsp;Sri Lanka: President Dissanayake retains defence and finance portfolios in new cabinet</a>

The shortage of foreign exchange, which left the country unable to finance even the most essential imports of food and fuel, led to months of street protests and forced then-president Gotabaya Rajapaksa to resign.

The $2.9 billion loan secured early last year required Colombo to sharply raise taxes, remove generous energy subsidies, and agree to restructure more than 50 loss-making state enterprises.

Dissanayake's predecessor Ranil Wickremesinghe secured the rescue that involved the disbursement of a $2.9 billion loan over four years.

In his first address to parliament, after his National People's Power party won a landslide at the November 14 election, Dissanayake backed the IMF deal on Thursday, marking a U-turn from his election pledge.

The dissatisfaction with traditional politicians held responsible for the economic collapse was a key driver of Dissanayake's electoral success.

Dissanayake said there was no room to make any mistakes in managing the economy.

Watch |&nbsp;Sri Lanka's New President Seeks IMF Deal Revisions, Eases Austerity

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According to Breuer, the new government's pledge to fight corruption will "reinvigorate governance reforms", rebuild economic confidence, and make growth more robust and inclusive.

Sri Lanka will now be able to draw down $333 million, subject to IMF board approval, by the end of the year.

Last month, Dissanayake's interim cabinet signed off on a controversial restructuring of $14.7 billion in foreign commercial credit tentatively agreed by Wickremesinghe.

The debt restructuring is a key IMF demand to rebuild the island's economy, which shrank 7.8 per cent in 2022, its worst performance ever.

Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION&nbsp;audience.

Sri Lanka's new leftist government has agreed to press ahead with a controversial IMF bailout program that involves tough austerity and economic reforms, the international lender announced Saturday.

Sri Lanka's new leftist government has agreed to press ahead with a controversial IMF bailout program that involves tough austerity and economic reforms, the international lender announced Saturday. The International Monetary Fund said it reached an agreement with President Anura Kumara Dissanayake's administration to continue with the four-year loan negotiated by his predecessor last year. "The authorities have committed to staying within the guardrails of the programme," IMF team leader Peter Breuer told reporters at the end of talks with the new government. He said the new government's commitment ensured policy continuity. "Sustaining the reform momentum is critical to safeguarding the hard-won gains of the programme, and putting the economy on a path towards lasting recovery and stable and inclusive growth," Breuer added. Sri Lanka went to the IMF for a rescue package after the country defaulted on its $46 billion external debt in April 2022 during an unprecedented economic meltdown. Also read: Sri Lanka: President Dissanayake retains defence and finance portfolios in new cabinet The shortage of foreign exchange, which left the country unable to finance even the most essential imports of food and fuel, led to months of street protests and forced then-president Gotabaya Rajapaksa to resign. The $2.9 billion loan secured early last year required Colombo to sharply raise taxes, remove generous energy subsidies, and agree to restructure more than 50 loss-making state enterprises. Dissanayake's predecessor Ranil Wickremesinghe secured the rescue that involved the disbursement of a $2.9 billion loan over four years. In his first address to parliament, after his National People's Power party won a landslide at the November 14 election, Dissanayake backed the IMF deal on Thursday, marking a U-turn from his election pledge. The dissatisfaction with traditional politicians held responsible for the economic collapse was a key driver of Dissanayake's electoral success. Dissanayake said there was no room to make any mistakes in managing the economy. Watch | Sri Lanka's New President Seeks IMF Deal Revisions, Eases Austerity × According to Breuer, the new government's pledge to fight corruption will "reinvigorate governance reforms", rebuild economic confidence, and make growth more robust and inclusive. Sri Lanka will now be able to draw down $333 million, subject to IMF board approval, by the end of the year. Last month, Dissanayake's interim cabinet signed off on a controversial restructuring of $14.7 billion in foreign commercial credit tentatively agreed by Wickremesinghe. The debt restructuring is a key IMF demand to rebuild the island's economy, which shrank 7.8 per cent in 2022, its worst performance ever. Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION audience.

IMF approves third review of Sri Lanka's $2.9 billion bailout

The real question is whether China's stimulus blitz is enough to pull the world's largest economy out of a deflationary spiral. Economists and investors have remained sceptical as they wait for more details on the stimulus plan. Now, according to a top International Monetary Fund (IMF) official, China's recent barrage of stimulus is insufficient to address the deflationary concerns.

Krishna Srinivasan, head of the IMF's Asia-Pacific department, said China "has to spend" more to address the housing catastrophe and deflation. Srinivasan noted that China needs to devote about 5 per cent of its gross domestic product to bring the property market out of a recession. According to Bloomberg calculations, that amounts to about 6.3 trillion yuan (or 885 billion dollars).

China's home prices are in the worst slump on record. The real estate crisis has wiped an estimated $18 trillion from household wealth. This has pushed China into its longest deflationary streak since 1999. Data this month showed that economic growth was slowing to the weakest in six quarters.

Srinivasan said, "We believe the measures announced will not be sufficient because domestic demand is very weak." the IMF official added, "You have to make sure the pre-sold housing gets finished, and number two, the issue of viable versus non-viable developers has to be resolved."

This comes as the trade dispute with the European Union escalates. Beijing has now asked its automakers to halt Europe expansion in a tit-for-tat response to the EU's tariffs on car imports from China. China's directive — which isn't a mandatory order —may fuel tensions as both powers vie for dominance of the automobile industry.

While the EU and China have pledged to work toward an alternative agreement that would avoid levies, Beijing said major disagreements remain over EV tariffs.

The real question is whether China's stimulus blitz is enough to pull the world's largest economy out of a deflationary spiral. Economists and investors have remained sceptical as they wait for more details on the stimulus plan.

The real question is whether China's stimulus blitz is enough to pull the world's largest economy out of a deflationary spiral. Economists and investors have remained sceptical as they wait for more details on the stimulus plan. Now, according to a top International Monetary Fund (IMF) official, China's recent barrage of stimulus is insufficient to address the deflationary concerns. Krishna Srinivasan, head of the IMF's Asia-Pacific department, said China "has to spend" more to address the housing catastrophe and deflation. Srinivasan noted that China needs to devote about 5 per cent of its gross domestic product to bring the property market out of a recession. According to Bloomberg calculations, that amounts to about 6.3 trillion yuan (or 885 billion dollars). China's home prices are in the worst slump on record. The real estate crisis has wiped an estimated $18 trillion from household wealth. This has pushed China into its longest deflationary streak since 1999. Data this month showed that economic growth was slowing to the weakest in six quarters. Srinivasan said, "We believe the measures announced will not be sufficient because domestic demand is very weak." the IMF official added, "You have to make sure the pre-sold housing gets finished, and number two, the issue of viable versus non-viable developers has to be resolved." This comes as the trade dispute with the European Union escalates. Beijing has now asked its automakers to halt Europe expansion in a tit-for-tat response to the EU's tariffs on car imports from China. China's directive — which isn't a mandatory order —may fuel tensions as both powers vie for dominance of the automobile industry. While the EU and China have pledged to work toward an alternative agreement that would avoid levies, Beijing said major disagreements remain over EV tariffs.

Chinese stimulus insufficient to curb deflation risks, IMF says

The real question is if china's stimulus blitz is enough to pull the world's largest economy out of a deflationary spiral. Economists and investors have remained sceptical as they wait for more details on the stimulus plan. Now, according to a top international monetary fund (IMF) official, China's recent barrage of stimulus is insufficient to address the deflationary concerns. Watch to know more.

Chinese Stimulus Insufficient To Curb Deflation Risks, IMF Says

Finance Minister of India (FM), Nirmala Sitharaman has called for deeper dialogue to help countries meet debt obligations without compromising critical investments at the Global Sovereign Debt Roundtable (GSDR), held on the sidelines of the World Bank and International Monetary Fund (IMF) Annual Meetings 2024 in Washington, DC as detailed in a report by the Business Standard.

She also cautioned against contingency financing instruments stating that they can lead to deferred obligations, which may worsen future debt challenges.

What is GSDR?<o:p></o:p>

The objective of the Global Sovereign Debt Roundtable (GSDR) is to build greater common understanding among key stakeholders involved in debt restructurings, and work together on the current shortcomings in debt restructuring processes, both within and outside the Common Framework, and ways to address them.

Further, the GSDR brings together debtor countries and creditors to foster a greater common understanding among key stakeholders on debt sustainability, debt restructuring challenges, and solutions to address these issues.

Details of the roundtable<o:p></o:p>

The roundtable is co-chaired by the International Monetary Fund (IMF), World Bank, and the Group of Twenty (G20) presidency which is currently held by Brazil and includes official bilateral creditors, private creditors, and borrowing countries. The goal of the meeting is to have elaborate discussions on debt.

While participating in the fourth G20 Finance Ministers and Central Bank Governors meeting, the Finance Minister remarked that the reform agenda for multilateral development banks (MDBs) has progressed under recent presidencies.

“The political momentum from this group is driving MDBs to pursue major reforms,” she stated, appreciating Brazil’s G20 presidency for building on the mandate from the Leaders’ Summit in Delhi.

The FM emphasised that a pathway has been established to enable MDBs to effectively address global challenges and development financing requirements. “India looks forward to engaging with the South African presidency in advancing this agenda,” she added. The same was mentioned by the Finance Ministry, in asocial media platform X, “Under the #G20IndiaPresidency, the Union finance minister said that #MDBs were encouraged to evolve their vision, incentive structures, operational approaches, and financing capacities.”

During the GSDR conversation, the FM also advocated using the roundtable’s informal platform to better understand the perspectives of all parties, address concerns, and provide informed guidance to countries on the risks and benefits of these instruments.

She stressed the need for improving timeliness, transparency, and predictability while ensuring comparability of treatment among creditors. Sitharaman also highlighted the necessity of prioritising coordinated efforts to secure low-cost, long-term financing and targeted technical assistance to strengthen fiscal capacity and build resilience in vulnerable countries.

Chairing a roundtable discussion on disaster-resilient infrastructure, she underlined the threat of climate-induced risks to infrastructure and the critical services it supports, warning that such risks could undercut development gains.

Sitharaman said that India has achieved resilient economic growth over the years by investing not only in hard infrastructure but also in building institutional capacity through the establishment of national and state-level disaster management agencies.

Extending assistance to the Global South on shared challenges, she said, “Under the G20 India presidency, a disaster risk reduction working group was created to increase commitment to disaster and climate-resilient infrastructure and to prioritise stronger national financial frameworks for disaster risk reduction.”

<o:p>&nbsp;</o:p>

Finance Minister of India (FM), Nirmala Sitharaman has called for deeper dialogue to help countries meet debt obligations without compromising critical investments at the Global Sovereign Debt Roundtable (GSDR), held on the sidelines of the World Bank and International Monetary Fund (IMF) Annual Meetings 2024 in Washington, DC as detailed in a report by the Business Standard.

Finance Minister of India (FM), Nirmala Sitharaman has called for deeper dialogue to help countries meet debt obligations without compromising critical investments at the Global Sovereign Debt Roundtable (GSDR), held on the sidelines of the World Bank and International Monetary Fund (IMF) Annual Meetings 2024 in Washington, DC as detailed in a report by the Business Standard. She also cautioned against contingency financing instruments stating that they can lead to deferred obligations, which may worsen future debt challenges. What is GSDR? The objective of the Global Sovereign Debt Roundtable (GSDR) is to build greater common understanding among key stakeholders involved in debt restructurings, and work together on the current shortcomings in debt restructuring processes, both within and outside the Common Framework, and ways to address them. Further, the GSDR brings together debtor countries and creditors to foster a greater common understanding among key stakeholders on debt sustainability, debt restructuring challenges, and solutions to address these issues. Details of the roundtable The roundtable is co-chaired by the International Monetary Fund (IMF), World Bank, and the Group of Twenty (G20) presidency which is currently held by Brazil and includes official bilateral creditors, private creditors, and borrowing countries. The goal of the meeting is to have elaborate discussions on debt. While participating in the fourth G20 Finance Ministers and Central Bank Governors meeting, the Finance Minister remarked that the reform agenda for multilateral development banks (MDBs) has progressed under recent presidencies. “The political momentum from this group is driving MDBs to pursue major reforms,” she stated, appreciating Brazil’s G20 presidency for building on the mandate from the Leaders’ Summit in Delhi. The FM emphasised that a pathway has been established to enable MDBs to effectively address global challenges and development financing requirements. “India looks forward to engaging with the South African presidency in advancing this agenda,” she added. The same was mentioned by the Finance Ministry, in asocial media platform X, “Under the #G20IndiaPresidency, the Union finance minister said that #MDBs were encouraged to evolve their vision, incentive structures, operational approaches, and financing capacities.” During the GSDR conversation, the FM also advocated using the roundtable’s informal platform to better understand the perspectives of all parties, address concerns, and provide informed guidance to countries on the risks and benefits of these instruments. She stressed the need for improving timeliness, transparency, and predictability while ensuring comparability of treatment among creditors. Sitharaman also highlighted the necessity of prioritising coordinated efforts to secure low-cost, long-term financing and targeted technical assistance to strengthen fiscal capacity and build resilience in vulnerable countries. Chairing a roundtable discussion on disaster-resilient infrastructure, she underlined the threat of climate-induced risks to infrastructure and the critical services it supports, warning that such risks could undercut development gains. Sitharaman said that India has achieved resilient economic growth over the years by investing not only in hard infrastructure but also in building institutional capacity through the establishment of national and state-level disaster management agencies. Extending assistance to the Global South on shared challenges, she said, “Under the G20 India presidency, a disaster risk reduction working group was created to increase commitment to disaster and climate-resilient infrastructure and to prioritise stronger national financial frameworks for disaster risk reduction.”

FM Sitharaman pushes for comprehensive talks on global sovereign debt

The world economy might contract by the size of the combined French and German economies, if there is a broad-based trade war between the world’s major economies, stated the International Monetary Fund (IMF) according to a detailed report by the BBC.

The BBC report detailed further that, it comes as concerns are heightened ahead of the possible re-election of Donald Trump. Trump says he plans to introduce a universal tax or tariff of up to 20 per cent on all imports into the US, while the European Union is already planning retaliation if Washington goes ahead with the new levy.

Brief details about Gita Gopinath<o:p></o:p>

Gita Gopinath is the First Deputy Managing Director of the International Monetary Fund (IMF) as of January 21, 2022. In that role, she oversees the work of staff, represents the Fund at multilateral forums, and maintains high-level contacts with member governments and Board members, the media, and other institutions. She also leads the Fund’s work on surveillance and related policies and oversees research and flagship publications. Gopinath previously served as the Chief Economist of the Fund from 2019-22.

Trump again raised tariff talk<o:p></o:p>

Further, last week, Trump said “tariff is the most beautiful word in the dictionary”, and global markets and finance ministers are now beginning to take seriously the prospect of him enacting the ideas, the BBC report elaborated further.

IMF Deputy Managing Director Gita Gopinath said the Fund could not yet assess the specifics of Trump's trade plans, but thinks that “if you have some very serious decoupling and broad scale use of tariffs, you could end up with a loss to world GDP of close to 7 per cent".

"These are very large numbers, 7 per cent is basically losing the French and German economies. That's the size of the loss that would be," she continued. Ms Gopinath also said tariffs worth hundreds of billions of dollars “is very different from the world we’ve lived in over the past two of three decades”.

The IMF’s deputy chief further stated that another of the Fund’s main messages at its Annual Meetings was to warn on ballooning levels of global government debt.

She said the current period of steady economic growth was a “moment to rebuild your fiscal buffers” as “this will not be the last crisis. There will be additional shocks. You will need the fiscal space to respond. And now is the time to do it”..

Important to look at the bright side <o:p></o:p>

Ms Gopinath said it was also necessary to “look at the bright side” with a resilient world economy after “some very tough knocks”. She suggested the world economy had seen a soft landing from the multiple crises. “Past experiences with bringing down inflation have not been with a soft landing. It was a big, big increases in unemployment. So that was a big hit, and it has turned out to be much better than many feared”, she said.

Ms Gopinath added that it was a “good win” for central banks everywhere that inflation has come down without high unemployment. But that now was the time to rebuild resilience in a challenging economic outlook. Hence, focus of investors and market participants will shift towards the issues highlighted by the Deputy Managing Director of IMF, Gita Gopinath and it will help them in taking better investment decisions.

The world economy might contract by the size of the combined French and German economies, if there is a broad-based trade war between the world’s major economies, stated the International Monetary Fund (IMF) according to a detailed report by the BBC.

The world economy might contract by the size of the combined French and German economies, if there is a broad-based trade war between the world’s major economies, stated the International Monetary Fund (IMF) according to a detailed report by the BBC. The BBC report detailed further that, it comes as concerns are heightened ahead of the possible re-election of Donald Trump. Trump says he plans to introduce a universal tax or tariff of up to 20 per cent on all imports into the US, while the European Union is already planning retaliation if Washington goes ahead with the new levy. Brief details about Gita Gopinath Gita Gopinath is the First Deputy Managing Director of the International Monetary Fund (IMF) as of January 21, 2022. In that role, she oversees the work of staff, represents the Fund at multilateral forums, and maintains high-level contacts with member governments and Board members, the media, and other institutions. She also leads the Fund’s work on surveillance and related policies and oversees research and flagship publications. Gopinath previously served as the Chief Economist of the Fund from 2019-22. Trump again raised tariff talk Further, last week, Trump said “tariff is the most beautiful word in the dictionary”, and global markets and finance ministers are now beginning to take seriously the prospect of him enacting the ideas, the BBC report elaborated further. IMF Deputy Managing Director Gita Gopinath said the Fund could not yet assess the specifics of Trump's trade plans, but thinks that “if you have some very serious decoupling and broad scale use of tariffs, you could end up with a loss to world GDP of close to 7 per cent". "These are very large numbers, 7 per cent is basically losing the French and German economies. That's the size of the loss that would be," she continued. Ms Gopinath also said tariffs worth hundreds of billions of dollars “is very different from the world we’ve lived in over the past two of three decades”. The IMF’s deputy chief further stated that another of the Fund’s main messages at its Annual Meetings was to warn on ballooning levels of global government debt. She said the current period of steady economic growth was a “moment to rebuild your fiscal buffers” as “this will not be the last crisis. There will be additional shocks. You will need the fiscal space to respond. And now is the time to do it”.. Important to look at the bright side Ms Gopinath said it was also necessary to “look at the bright side” with a resilient world economy after “some very tough knocks”. She suggested the world economy had seen a soft landing from the multiple crises. “Past experiences with bringing down inflation have not been with a soft landing. It was a big, big increases in unemployment. So that was a big hit, and it has turned out to be much better than many feared”, she said. Ms Gopinath added that it was a “good win” for central banks everywhere that inflation has come down without high unemployment. But that now was the time to rebuild resilience in a challenging economic outlook. Hence, focus of investors and market participants will shift towards the issues highlighted by the Deputy Managing Director of IMF, Gita Gopinath and it will help them in taking better investment decisions.

IMF warns world to avoid trade war as it could dent global economy

An escalation of trade and tariffs tensions between the US and China would have “costly” economic consequences around the world, Gita Gopinath, deputy managing director of the International Monetary Fund stated in a conversation with CNBC on October 23. This advice comes amid the ongoing trade tensions between the US and China.

“We are seeing geopolitically driven trade around the world, which is why when you look at overall trade to GDP that’s holding up fine, but who’s trading with whom is certainly changing,” she said. The US and China are trading with one another less, and some parts of their trade are being re-routed through other countries, she added.

Trade tensions between the US and China and the European Union and China have been mounting this year, with both the US and EU implementing higher tariffs on some Chinese goods over what they claim are unfair trade practices from Beijing.

China has also announced higher temporary tariffs on some imports from the EU as the tit-for-tat measures continue. If tariffs were escalated, modelling from the IMF suggests it would be “costly for everybody,” Gopinath told CNBC on the sidelines of the agency’s annual meeting in Washington. “Output is going to be much lower than what we are projecting for all countries in the world, there’s going to be inflation pressure, so that’s not the direction in which we should be going,” she explained.

Gopinath’s comments come after IMF Managing Director Kristalina Georgieva said last week that international trade would no longer be the “engine of growth” it once was, and that “retaliatory” trade measures could hurt those imposing them as much as their targets.

Tim Adams, CEO of the Institute of International Finance, also warned Wednesday that tariff proposals from US presidential candidate Donald Trump would interrupt the path of disinflation and could lead to higher interest rates.

The IMF’s Gopinath said it would benefit both the US and China to have “good working relations,” noting that this was also important for the rest of the world. It is “in everyone’s self-interest that these relationships are maintained,” she said.

The IMF warned in its recent World Economic Outlook report that increasing protectionist policies were a downside risk to growth. “A broad-based retreat from a rules-based global trading system is prompting many countries to take unilateral actions. Not only would an intensification of protectionist policies exacerbate global trade tensions and disrupt global supply chains, but it could also weigh down medium-term growth prospects,” the report said.

An escalation of trade and tariffs tensions between the US and China would have “costly” economic consequences around the world, Gita Gopinath, deputy managing director of the International Monetary Fund stated in a conversation with CNBC on October 23.

An escalation of trade and tariffs tensions between the US and China would have “costly” economic consequences around the world, Gita Gopinath, deputy managing director of the International Monetary Fund stated in a conversation with CNBC on October 23. This advice comes amid the ongoing trade tensions between the US and China. “We are seeing geopolitically driven trade around the world, which is why when you look at overall trade to GDP that’s holding up fine, but who’s trading with whom is certainly changing,” she said. The US and China are trading with one another less, and some parts of their trade are being re-routed through other countries, she added. Trade tensions between the US and China and the European Union and China have been mounting this year, with both the US and EU implementing higher tariffs on some Chinese goods over what they claim are unfair trade practices from Beijing. China has also announced higher temporary tariffs on some imports from the EU as the tit-for-tat measures continue. If tariffs were escalated, modelling from the IMF suggests it would be “costly for everybody,” Gopinath told CNBC on the sidelines of the agency’s annual meeting in Washington. “Output is going to be much lower than what we are projecting for all countries in the world, there’s going to be inflation pressure, so that’s not the direction in which we should be going,” she explained. Gopinath’s comments come after IMF Managing Director Kristalina Georgieva said last week that international trade would no longer be the “engine of growth” it once was, and that “retaliatory” trade measures could hurt those imposing them as much as their targets. Tim Adams, CEO of the Institute of International Finance, also warned Wednesday that tariff proposals from US presidential candidate Donald Trump would interrupt the path of disinflation and could lead to higher interest rates. The IMF’s Gopinath said it would benefit both the US and China to have “good working relations,” noting that this was also important for the rest of the world. It is “in everyone’s self-interest that these relationships are maintained,” she said. The IMF warned in its recent World Economic Outlook report that increasing protectionist policies were a downside risk to growth. “A broad-based retreat from a rules-based global trading system is prompting many countries to take unilateral actions. Not only would an intensification of protectionist policies exacerbate global trade tensions and disrupt global supply chains, but it could also weigh down medium-term growth prospects,” the report said.

US, China trade tariffs escalating would be ‘costly for everybody': IMF

The International Monetary Fund (IMF) has announced a significant update regarding the global economy's ongoing battle against inflation. In a recent report, the IMF stated that while the fight against inflation is "almost won," several emerging risks could threaten this progress.

The findings come as global inflation rates are projected to decline, yet concerns about geopolitical tensions and economic slowdowns in key markets remain prevalent as detailed in a report by CNBC.

Inflation rates on the decline<o:p></o:p>

According to the IMF's latest forecasts, global headline inflation will fall to 3.5 per cent on an annual basis by the end of 2025, from an average 5.8 per cent in 2024, the agency said in its World Economic Outlook released on October 22.

“The global battle against inflation is almost won,” the IMF report stated, even as it called for “a policy triple pivot” to address interest rates, government spending, and reforms and investment to boost productivity.

Inflation peaked at a year-over-year rate of 9.4 per cent in the third quarter of 2022. The year-end 2025 rate is slightly below the average annual rise in prices in the two decades before the Covid-19 pandemic. This positive trend is largely attributed to tighter monetary policies implemented by central banks worldwide, which have begun to show results in curbing rising prices.

Pierre-Olivier Gourinchas, the IMF's chief economist, expressed optimism about the global economy's trajectory. He noted that advanced economies, particularly the United States and the Eurozone, are expected to lead this recovery, the CNBC report detailed further.

The US economy has already surpassed its pre-pandemic growth levels, while the Eurozone shows promising signs of recovery after a challenging period. He further stated that, “Despite the good news on inflation, downside risks are increasing and now dominate the outlook.”

Emerging risks threatening progress<o:p></o:p>

Despite these optimistic projections, Gourinchas warned of several downside risks that could hinder economic stability. Notably, China's economic performance has been under scrutiny due to ongoing challenges in its property market and consumer confidence issues. The IMF highlighted that any slowdown in China could have ripple effects on global trade partners.

Other risks include potential price spikes driven by geopolitical tensions and trade disputes. As central banks navigate these complexities, they must also manage interest rates carefully to avoid stifling growth or allowing inflation to resurge.

The global growth estimate for 2024 and 2025 according to the fund is expected to be 3.2 per cent. IMF believes that this rate is stable but still remains underwhelming. The United States is now forecast to see faster growth, along with strong expansions are also likely in emerging Asian economies as a result of robust artificial intelligence-related investments.

Still, the IMF lowered its outlook for other advanced economies, notably the largest European nations, as well as several emerging markets, blaming escalating global conflicts and ensuing risk to commodity prices.

The report underlines the importance of fiscal policy adjustments as countries strive for sustainable growth. Gourinchas emphasised that while central banks are crucial in managing inflation, governments must also focus on medium-term fiscal consolidation to ensure budgetary flexibility and sustainable debt levels.

Looking ahead: A cautious optimism<o:p></o:p>

While the IMF's five-year forecast projects global growth at a modest 3.1 per cent, representing the lowest level in decades, there are reasons for cautious optimism. The anticipated decline in inflation rates could provide a more stable environment for investment and consumer spending. It is important to note that, structural headwinds such as low productivity and aging populations are also limiting growth prospects.

The report also identifies potential growth drivers such as advancements in technology and looser fiscal policies that could bolster economic activity moving forward. However, as central banks deliberate on future interest rate adjustments, their decisions will be pivotal in shaping the economic landscape.

Therefore, while the IMF's report indicates substantial progress in combating inflation globally, it also serves as a reminder of the numerous challenges that lie ahead. Policymakers must remain vigilant and adaptable to ensure sustained economic growth amidst evolving risks and uncertainties.

The International Monetary Fund (IMF) has announced a significant update regarding the global economy's ongoing battle against inflation. In a recent report, the IMF stated that while the fight against inflation is "almost won," several emerging risks could threaten this progress.

The International Monetary Fund (IMF) has announced a significant update regarding the global economy's ongoing battle against inflation. In a recent report, the IMF stated that while the fight against inflation is "almost won," several emerging risks could threaten this progress. The findings come as global inflation rates are projected to decline, yet concerns about geopolitical tensions and economic slowdowns in key markets remain prevalent as detailed in a report by CNBC. Inflation rates on the decline According to the IMF's latest forecasts, global headline inflation will fall to 3.5 per cent on an annual basis by the end of 2025, from an average 5.8 per cent in 2024, the agency said in its World Economic Outlook released on October 22. “The global battle against inflation is almost won,” the IMF report stated, even as it called for “a policy triple pivot” to address interest rates, government spending, and reforms and investment to boost productivity. Inflation peaked at a year-over-year rate of 9.4 per cent in the third quarter of 2022. The year-end 2025 rate is slightly below the average annual rise in prices in the two decades before the Covid-19 pandemic. This positive trend is largely attributed to tighter monetary policies implemented by central banks worldwide, which have begun to show results in curbing rising prices. Pierre-Olivier Gourinchas, the IMF's chief economist, expressed optimism about the global economy's trajectory. He noted that advanced economies, particularly the United States and the Eurozone, are expected to lead this recovery, the CNBC report detailed further. The US economy has already surpassed its pre-pandemic growth levels, while the Eurozone shows promising signs of recovery after a challenging period. He further stated that, “Despite the good news on inflation, downside risks are increasing and now dominate the outlook.” Emerging risks threatening progress Despite these optimistic projections, Gourinchas warned of several downside risks that could hinder economic stability. Notably, China's economic performance has been under scrutiny due to ongoing challenges in its property market and consumer confidence issues. The IMF highlighted that any slowdown in China could have ripple effects on global trade partners. Other risks include potential price spikes driven by geopolitical tensions and trade disputes. As central banks navigate these complexities, they must also manage interest rates carefully to avoid stifling growth or allowing inflation to resurge. The global growth estimate for 2024 and 2025 according to the fund is expected to be 3.2 per cent. IMF believes that this rate is stable but still remains underwhelming. The United States is now forecast to see faster growth, along with strong expansions are also likely in emerging Asian economies as a result of robust artificial intelligence-related investments. Still, the IMF lowered its outlook for other advanced economies, notably the largest European nations, as well as several emerging markets, blaming escalating global conflicts and ensuing risk to commodity prices. The report underlines the importance of fiscal policy adjustments as countries strive for sustainable growth. Gourinchas emphasised that while central banks are crucial in managing inflation, governments must also focus on medium-term fiscal consolidation to ensure budgetary flexibility and sustainable debt levels. Looking ahead: A cautious optimism While the IMF's five-year forecast projects global growth at a modest 3.1 per cent, representing the lowest level in decades, there are reasons for cautious optimism. The anticipated decline in inflation rates could provide a more stable environment for investment and consumer spending. It is important to note that, structural headwinds such as low productivity and aging populations are also limiting growth prospects. The report also identifies potential growth drivers such as advancements in technology and looser fiscal policies that could bolster economic activity moving forward. However, as central banks deliberate on future interest rate adjustments, their decisions will be pivotal in shaping the economic landscape. Therefore, while the IMF's report indicates substantial progress in combating inflation globally, it also serves as a reminder of the numerous challenges that lie ahead. Policymakers must remain vigilant and adaptable to ensure sustained economic growth amidst evolving risks and uncertainties.

Global fight against inflation nearly won, but new risks emerge, says IMF

The IMF has encouraged world finance leaders to tighten their fiscal belts before they meet in Washington over the next few days. With the world's recent inflation crisis behind them and two weeks before a possibly historic US Election, ministers and central bankers gathered in the nation's capital face mounting pressure to organise their fiscal homes while they can. Take a look at this next report for more...

IMF Urges Debt Reduction As Finance Chiefs Meet In Washington

The global economy faces increasing challenges as low growth and mounting debt continue to weigh on financial stability, according to the International Monetary Fund (IMF) Managing Director Kristalina Georgieva as detailed by her in her conversation with&nbsp;CNBC.&nbsp;

Speaking at a recent forum, Georgieva urged world leaders to take decisive action, stressing that these factors pose significant risks to both developed and emerging economies.

Growth stagnation and rising debt levels<o:p></o:p>

Georgieva highlighted that global economic growth remains sluggish, hovering below its potential, primarily due to the pandemic’s lingering effects, inflationary pressures, and geopolitical tensions. “We are navigating a complicated environment where risks are high, and the outlook is uncertain,” she stated, emphasising the need for a concerted effort to restore economic resilience.<o:p></o:p>

While countries are making strides in recovery, many have resorted to increased borrowing to stimulate their economies. This has resulted in escalating public debt levels, which could hinder sustainable growth in the long term. The IMF estimates that global debt levels surged to nearly 100 per cent of the global GDP during the pandemic, straining fiscal policies worldwide. <o:p></o:p>

Georgieva cautioned that without effective management, these debts could result in prolonged financial distress for several countries. “The danger is that high debt levels can choke growth, making it harder for governments to invest in vital sectors such as healthcare, education, and infrastructure,” she added.<o:p></o:p>

Call for global cooperation and economic reforms<o:p></o:p>

The IMF Chief called for greater global cooperation to combat these pressing issues, stressing that piecemeal approaches will not be sufficient. “In this interconnected world, no country is immune to shocks. We need stronger multilateral cooperation to address global economic challenges,” she said.<o:p></o:p>

Georgieva also advocated for structural reforms and targeted policies aimed at strengthening economic fundamentals. She pointed out that addressing inefficiencies in tax collection, reducing corruption, and increasing public investment in innovation would help countries improve their fiscal standing. “Governments must seize the opportunity to implement reforms now before the situation deteriorates further,” she urged

Potential solutions and the path forward<o:p></o:p>

To address the global economic slowdown and growing debt crisis, the IMF has called for a balance between fiscal consolidation and investment in growth-enhancing sectors. Countries are encouraged to prioritise areas that can generate long-term economic benefits, including green energy, digital transformation, and education.<o:p></o:p>

Moreover, Georgieva noted the importance of debt restructuring for highly indebted nations, proposing that debt relief measures, along with support from international lenders, could help vulnerable economies recover faster. “The IMF stands ready to support countries with the tools they need to reduce their debt burden and foster growth,” she reaffirmed.

“We are all very worried about the expanding conflict in West Asia and its potential to destabilise regional economies and global oil and gas markets,” she further added.&nbsp;

<o:p></o:p>

As global economic uncertainties continue, it is clear that coordinated action and bold reforms are essential to safeguard long-term financial stability. The IMF’s warnings serve as a wake-up call for policymakers to act swiftly and decisively in the face of these mounting challenges.<o:p></o:p>

The global economy faces increasing challenges as low growth and mounting debt continue to weigh on financial stability, according to the International Monetary Fund (IMF) Managing Director Kristalina Georgieva as detailed by her in her conversation with CNBC.

The global economy faces increasing challenges as low growth and mounting debt continue to weigh on financial stability, according to the International Monetary Fund (IMF) Managing Director Kristalina Georgieva as detailed by her in her conversation with CNBC. Speaking at a recent forum, Georgieva urged world leaders to take decisive action, stressing that these factors pose significant risks to both developed and emerging economies. Growth stagnation and rising debt levels Georgieva highlighted that global economic growth remains sluggish, hovering below its potential, primarily due to the pandemic’s lingering effects, inflationary pressures, and geopolitical tensions. “We are navigating a complicated environment where risks are high, and the outlook is uncertain,” she stated, emphasising the need for a concerted effort to restore economic resilience. While countries are making strides in recovery, many have resorted to increased borrowing to stimulate their economies. This has resulted in escalating public debt levels, which could hinder sustainable growth in the long term. The IMF estimates that global debt levels surged to nearly 100 per cent of the global GDP during the pandemic, straining fiscal policies worldwide. Georgieva cautioned that without effective management, these debts could result in prolonged financial distress for several countries. “The danger is that high debt levels can choke growth, making it harder for governments to invest in vital sectors such as healthcare, education, and infrastructure,” she added. Call for global cooperation and economic reforms The IMF Chief called for greater global cooperation to combat these pressing issues, stressing that piecemeal approaches will not be sufficient. “In this interconnected world, no country is immune to shocks. We need stronger multilateral cooperation to address global economic challenges,” she said. Georgieva also advocated for structural reforms and targeted policies aimed at strengthening economic fundamentals. She pointed out that addressing inefficiencies in tax collection, reducing corruption, and increasing public investment in innovation would help countries improve their fiscal standing. “Governments must seize the opportunity to implement reforms now before the situation deteriorates further,” she urged Potential solutions and the path forward To address the global economic slowdown and growing debt crisis, the IMF has called for a balance between fiscal consolidation and investment in growth-enhancing sectors. Countries are encouraged to prioritise areas that can generate long-term economic benefits, including green energy, digital transformation, and education. Moreover, Georgieva noted the importance of debt restructuring for highly indebted nations, proposing that debt relief measures, along with support from international lenders, could help vulnerable economies recover faster. “The IMF stands ready to support countries with the tools they need to reduce their debt burden and foster growth,” she reaffirmed. “We are all very worried about the expanding conflict in West Asia and its potential to destabilise regional economies and global oil and gas markets,” she further added. As global economic uncertainties continue, it is clear that coordinated action and bold reforms are essential to safeguard long-term financial stability. The IMF’s warnings serve as a wake-up call for policymakers to act swiftly and decisively in the face of these mounting challenges.

Global economy faces hurdles as IMF Chief flags low growth and high debt concerns

Ahead of the BRICS Summit to be held later this month, Russia which chairs the BRICS group has called on its partners to come up with an alternative to the International Monetary Fund(IMF). The reason being it is bearing the brunt of Western sanctions due to its war in Ukraine. BRICS comprise countries which are key drivers of economic growth, most notably India and China which are the fastest-growing economies. With more countries joining hands, BRICS is fast emerging as a geopolitical counterweight to the West, which seeks to challenge the hegemony of Western institutions such as the World Bank and the United Nations.

Russia Proposes IMF Alternative: Can BRICS Set A New World Order?

The international monetary fund has raised alarms on the growing debt crisis gripping global economies. Global public debt is projected to exceed 100 trillion dollars by the end of 2024, amounting to approximately 93 percent of global gross domestic product.

IMF: Global Public Debt To Exceed $100 Trillion By 2024

Global public debt is set to surpass $100 trillion this year, signalling urgent calls for stronger fiscal measures from major economies, according to a recent report from the International Monetary Fund (IMF).

As governments continue to grapple with the economic fallout from the Covid-19 pandemic, the rising tide of debt is becoming increasingly concerning, with projections indicating that global debt could approach 100 per cent of world GDP by the end of the decade as elaborated in a recent report by the Financial Times.

The IMF's Fiscal Monitor report highlights that government borrowing has surged as countries adopt expansive spending strategies aimed at stimulating economic growth. The United States and China are identified as key drivers behind this increase, with their respective debts contributing significantly to the global total. The report notes that the ratio of public debt to GDP has risen sharply, now sitting approximately 10 percentage points higher than pre-pandemic levels.

Countries such as the UK, Brazil, France, Italy, and South Africa are among those expected to see continued increases in their debt levels. The IMF warns that without decisive action, future debt levels could exceed current projections, necessitating substantial fiscal adjustments to stabilise or reduce borrowing. The fund advocates for well-designed fiscal policies that not only support economic growth but also protect vulnerable households during this challenging period.

As inflationary pressures begin to ease and central banks like the US Federal Reserve and the European Central Bank lower borrowing costs, the IMF suggests that now is a critical time for governments to rebuild their fiscal buffers. The report emphasises that delaying necessary adjustments will only worsen&nbsp;future challenges, calling for cumulative fiscal adjustments ranging from 3 per cent to 4.5 per cent of GDP globally.

The IMF's recommendations include re-prioritising government expenditures, implementing entitlement reforms, increasing revenues through indirect taxes in low-taxation areas, and eliminating inefficient tax incentives.

Additionally, it highlights that ongoing government spending related to transitioning to greener energy sources, coupled with challenges posed by ageing populations and security concerns, is likely to add further pressure on public finances in the years ahead.

This report comes at a pivotal moment as China embarks on a substantial fiscal stimulus plan aimed at rejuvenating its economy. Meanwhile, in the United States, upcoming presidential election campaigns are projected to significantly swell federal debt by trillions of dollars.

Concerns over escalating borrowing levels have already triggered a sell-off in government bond markets across various countries, including the UK and France. In response to these mounting pressures, UK Chancellor Rachel Reeves is expected to use her upcoming Budget announcement to adjust the definition of public debt within the country’s fiscal rules, potentially allowing for increased borrowing.

As global economies navigate these turbulent waters, the IMF's findings serve as a stark reminder of the urgent need for comprehensive fiscal strategies that can address both current challenges and future sustainability.

Global public debt is set to surpass $100 trillion this year, signalling urgent calls for stronger fiscal measures from major economies, according to a recent report from the International Monetary Fund (IMF).

Global public debt is set to surpass $100 trillion this year, signalling urgent calls for stronger fiscal measures from major economies, according to a recent report from the International Monetary Fund (IMF). As governments continue to grapple with the economic fallout from the Covid-19 pandemic, the rising tide of debt is becoming increasingly concerning, with projections indicating that global debt could approach 100 per cent of world GDP by the end of the decade as elaborated in a recent report by the Financial Times. The IMF's Fiscal Monitor report highlights that government borrowing has surged as countries adopt expansive spending strategies aimed at stimulating economic growth. The United States and China are identified as key drivers behind this increase, with their respective debts contributing significantly to the global total. The report notes that the ratio of public debt to GDP has risen sharply, now sitting approximately 10 percentage points higher than pre-pandemic levels. Countries such as the UK, Brazil, France, Italy, and South Africa are among those expected to see continued increases in their debt levels. The IMF warns that without decisive action, future debt levels could exceed current projections, necessitating substantial fiscal adjustments to stabilise or reduce borrowing. The fund advocates for well-designed fiscal policies that not only support economic growth but also protect vulnerable households during this challenging period. As inflationary pressures begin to ease and central banks like the US Federal Reserve and the European Central Bank lower borrowing costs, the IMF suggests that now is a critical time for governments to rebuild their fiscal buffers. The report emphasises that delaying necessary adjustments will only worsen future challenges, calling for cumulative fiscal adjustments ranging from 3 per cent to 4.5 per cent of GDP globally. The IMF's recommendations include re-prioritising government expenditures, implementing entitlement reforms, increasing revenues through indirect taxes in low-taxation areas, and eliminating inefficient tax incentives. Additionally, it highlights that ongoing government spending related to transitioning to greener energy sources, coupled with challenges posed by ageing populations and security concerns, is likely to add further pressure on public finances in the years ahead. This report comes at a pivotal moment as China embarks on a substantial fiscal stimulus plan aimed at rejuvenating its economy. Meanwhile, in the United States, upcoming presidential election campaigns are projected to significantly swell federal debt by trillions of dollars. Concerns over escalating borrowing levels have already triggered a sell-off in government bond markets across various countries, including the UK and France. In response to these mounting pressures, UK Chancellor Rachel Reeves is expected to use her upcoming Budget announcement to adjust the definition of public debt within the country’s fiscal rules, potentially allowing for increased borrowing. As global economies navigate these turbulent waters, the IMF's findings serve as a stark reminder of the urgent need for comprehensive fiscal strategies that can address both current challenges and future sustainability.

Global public debt to pass $100tn this year: IMF Report

Sri Lanka's newly elected President, Anura Kumara Dissanayake, met with International Monetary Fund representatives in Colombo to discuss the country's ongoing $2.9 billion bailout.

Sri Lanka's New President Seeks IMF Deal Revisions, Eases Austerity

In his first meeting with the IMF in Colombo, newly elected Sri Lankan President Anura Kumara Dissanayake, a self-avowed Marxist, advocated for tax cuts on lower-income groups. Having won the September 21 election, he pledged to reverse steep tax hikes, raise public servant salaries, and renegotiate the bailout secured by his predecessor, Ranil Wickremesinghe, while committing to continue the IMF's four-year reform programme.

Sri Lankan President Dissanayake Seeks IMF Deal Revisions, Eases Austerity

Ahead of the upcoming Sri Lanka elections, opposition leader Sajith Premadasa has laid out conditions for forming an alliance with the United National Party (UNP). Premadasa, leader of the Samagi Jana Balawegaya (SJB), has expressed willingness to collaborate but insists on key policy agreements and leadership roles within the coalition. The potential alliance could reshape the electoral landscape, as both parties seek to strengthen their positions against the ruling government. Negotiations are ongoing as the election date approaches.

Sri Lanka Elections: Sajith Premadasa Sets Conditions For Alliance With UNP

Pakistan is implementing sweeping reforms to cut costs and meet the terms of a $7 billion loan deal with the international monetary fund. The government announced plans to cut 150,000 government jobs, close six ministries, and merge two others. These measures are part of an agreement with the IMF to reduce administrative expenditures, increase the tax-to-GDP ratio, and formalise the economy.

Pakistan Cuts Expenditures, Expands Tax Base in IMF-backed Reforms

Pakistan is taking drastic measures to address its ongoing economic crisis, announcing significant job cuts and the dissolution of several government ministries as part of a new agreement with the International Monetary Fund (IMF). The country, which has been grappling with financial instability for years, is now implementing these changes to secure its future and avoid default according to a detailed Press Trust of India report. <o:p></o:p>

Job cuts and Ministry restructuring<o:p></o:p>

In a recent press conference, Finance Minister Muhammad Aurangzeb revealed that the government will eliminate 150,000 positions across various ministries. Additionally, six ministries will be dissolved while two others will be merged. This right-sizing initiative aims to streamline government operations and reduce fiscal burdens as Pakistan strives to formalise its economy. Aurangzeb emphasised that these measures are crucial for the country’s ambition to join the G20.<o:p></o:p>

The finance minister also highlighted improvements in tax collection, noting that the number of registered taxpayers has surged from 1.6 million to 3.2 million within a year. This increase is attributed to approximately 732,000 new taxpayers who have registered so far this year. The government plans to abolish the non-filers category, making it impossible for those not paying taxes to purchase property or vehicles.<o:p></o:p>

Positive economic indicators<o:p></o:p>

Despite the challenges, Aurangzeb expressed optimism about Pakistan’s economic trajectory. He stated that foreign exchange reserves are at their highest levels in recent times, alongside notable growth in national exports and IT services. Investor confidence appears to be returning, which he described as a significant achievement for the government.<o:p></o:p>

The finance minister also pointed out that inflation has decreased to single digits due to effective government policies. He reassured citizens that the economy is moving in the right direction, with expectations that both the exchange rate and policy rate will stabilise.<o:p></o:p>

A long road ahead<o:p></o:p>

Pakistan's economic struggles have been worsened by its reliance on loans from international lenders. In 2023, the country was on the brink of default but managed to secure a USD 3 billion loan from the IMF. The current agreement is seen as a potential last resort; however, doubts remains regarding Pakistan's ability to sustain long-term economic reforms after having previously secured numerous loans without lasting improvements.<o:p></o:p>

As Pakistan embarks on this challenging path towards economic recovery, the government's commitment to restructuring and reform will be closely scrutinised by both domestic and international observers. The coming months will be pivotal in determining whether these measures can indeed pave the way for a more stable financial future for the nation.<o:p></o:p>

<o:p>&nbsp;</o:p>

Pakistan is taking drastic measures to address its ongoing economic crisis, announcing significant job cuts and the dissolution of several government ministries as part of a new agreement with the International Monetary Fund (IMF).

Pakistan is taking drastic measures to address its ongoing economic crisis, announcing significant job cuts and the dissolution of several government ministries as part of a new agreement with the International Monetary Fund (IMF). The country, which has been grappling with financial instability for years, is now implementing these changes to secure its future and avoid default according to a detailed Press Trust of India report. Job cuts and Ministry restructuring In a recent press conference, Finance Minister Muhammad Aurangzeb revealed that the government will eliminate 150,000 positions across various ministries. Additionally, six ministries will be dissolved while two others will be merged. This right-sizing initiative aims to streamline government operations and reduce fiscal burdens as Pakistan strives to formalise its economy. Aurangzeb emphasised that these measures are crucial for the country’s ambition to join the G20. The finance minister also highlighted improvements in tax collection, noting that the number of registered taxpayers has surged from 1.6 million to 3.2 million within a year. This increase is attributed to approximately 732,000 new taxpayers who have registered so far this year. The government plans to abolish the non-filers category, making it impossible for those not paying taxes to purchase property or vehicles. Positive economic indicators Despite the challenges, Aurangzeb expressed optimism about Pakistan’s economic trajectory. He stated that foreign exchange reserves are at their highest levels in recent times, alongside notable growth in national exports and IT services. Investor confidence appears to be returning, which he described as a significant achievement for the government. The finance minister also pointed out that inflation has decreased to single digits due to effective government policies. He reassured citizens that the economy is moving in the right direction, with expectations that both the exchange rate and policy rate will stabilise. A long road ahead Pakistan's economic struggles have been worsened by its reliance on loans from international lenders. In 2023, the country was on the brink of default but managed to secure a USD 3 billion loan from the IMF. The current agreement is seen as a potential last resort; however, doubts remains regarding Pakistan's ability to sustain long-term economic reforms after having previously secured numerous loans without lasting improvements. As Pakistan embarks on this challenging path towards economic recovery, the government's commitment to restructuring and reform will be closely scrutinised by both domestic and international observers. The coming months will be pivotal in determining whether these measures can indeed pave the way for a more stable financial future for the nation.

Cash-strapped Pakistan cuts 150,000 jobs and dissolves ministries in IMF deal

India's Union Defence Minister Rajnath Singh has stated that New Delhi could have given more money to Pakistan than it is about to&nbsp;receive from the International Monetary Fund (IMF) if ties were better between the two bitter neighbours.&nbsp;

Singh was addressing an election rally in the Gurez assembly seat of Bandipora district in North Kashmir when he made the comment.&nbsp;

“Modi ji had, in 2014-15, announced a special package for the development of J&amp;K, which has now reached Rs 90,000 crore ($10.74 billion). The amount is much bigger than what Pakistan was seeking from the IMF (as a bailout package),” Singh said.

“My Pakistani friends, why have strained relations, we are neighbours. If we had good relations, we would have given you more money than the IMF,” he added.

Singh said Pakistan was using the financial aid money to fund terrorism which had stalled its economic progress.&nbsp;

“It seeks money from other countries to run a terrorism factory on its soil,” said Singh.&nbsp;

Notably, the IMF board last week approved a&nbsp;$7 billion Extended Fund Facility (EFF) for cash-strapped Pakistan to boost its struggling economy.&nbsp;The $7 billion bailout package was approved after Pakistan promised to overhaul its agriculture income tax, transfer some fiscal responsibilities to provinces and take the most expensive loan in the nation's history.&nbsp;

<a href="https://www.wionews.com/videos/pakistan-general-asim-munir-clubs-kargil-war-with-other-wars-against-india-756700" target="_blank">Watch |&nbsp;Pakistan General Asim Munir clubs Kargil war with other wars against India</a>

<iframe allowfullscreen="" autoplay="1" frameborder="0" height="350" src="https://www.wionews.com/videos/pakistan-general-asim-munir-clubs-kargil-war-with-other-wars-against-india-756700/embed" width="560"></iframe>

<h2>Rajnath tells PoK residents to join India&nbsp;</h2>

Earlier this month, Singh had urged residents of&nbsp;Pakistan-occupied Kashmir (PoK) to join India, adding that the region would soon become a part of India.&nbsp;&nbsp;

“Once our government is formed in Jammu and Kashmir, we will carry out development that will make the people of Pakistan-Occupied Kashmir (PoK) want to become part of India,” said Singh.

"Support the BJP to form the next government in J&amp;K so that we can facilitate massive development in the region. There will be so much development that the people in PoK on seeing this should say that we do not want to live with Pakistan and instead will go to India," he added.

<a href="https://www.wionews.com/south-asia/imf-approves-7-billion-loan-for-cash-strapped-pakistan-762052">Also read |&nbsp;IMF approves $7 billion loan for cash-strapped Pakistan</a>

"I want to tell PoK residents that Pakistan is considering you foreigner but the people in India do not consider you as such. We consider you as our own and so come and join us."

India has refused to maintain bilateral relations with Pakistan stating that unless Islamabad continues to export terrorism, there was no ground to hold talks and maintain a cordial relationship.&nbsp;&nbsp;

(With inputs from agencies)

India's Union Defence Minister Rajnath Singh has stated that New Delhi could have given more money to Pakistan than it is about to receive from the International Monetary Fund (IMF) if ties were better between the two bitter neighbours.

India's Union Defence Minister Rajnath Singh has stated that New Delhi could have given more money to Pakistan than it is about to receive from the International Monetary Fund (IMF) if ties were better between the two bitter neighbours. Singh was addressing an election rally in the Gurez assembly seat of Bandipora district in North Kashmir when he made the comment. “Modi ji had, in 2014-15, announced a special package for the development of J&K, which has now reached Rs 90,000 crore ($10.74 billion). The amount is much bigger than what Pakistan was seeking from the IMF (as a bailout package),” Singh said. “My Pakistani friends, why have strained relations, we are neighbours. If we had good relations, we would have given you more money than the IMF,” he added. Singh said Pakistan was using the financial aid money to fund terrorism which had stalled its economic progress. “It seeks money from other countries to run a terrorism factory on its soil,” said Singh. Notably, the IMF board last week approved a $7 billion Extended Fund Facility (EFF) for cash-strapped Pakistan to boost its struggling economy. The $7 billion bailout package was approved after Pakistan promised to overhaul its agriculture income tax, transfer some fiscal responsibilities to provinces and take the most expensive loan in the nation's history. Watch | Pakistan General Asim Munir clubs Kargil war with other wars against India Rajnath tells PoK residents to join India Earlier this month, Singh had urged residents of Pakistan-occupied Kashmir (PoK) to join India, adding that the region would soon become a part of India. “Once our government is formed in Jammu and Kashmir, we will carry out development that will make the people of Pakistan-Occupied Kashmir (PoK) want to become part of India,” said Singh. "Support the BJP to form the next government in J&K so that we can facilitate massive development in the region. There will be so much development that the people in PoK on seeing this should say that we do not want to live with Pakistan and instead will go to India," he added. Also read | IMF approves $7 billion loan for cash-strapped Pakistan "I want to tell PoK residents that Pakistan is considering you foreigner but the people in India do not consider you as such. We consider you as our own and so come and join us." India has refused to maintain bilateral relations with Pakistan stating that unless Islamabad continues to export terrorism, there was no ground to hold talks and maintain a cordial relationship. (With inputs from agencies)

'India could've offered Pakistan more money than IMF aid if...': Defence minister Rajnath Singh

The international monetary fund has approved a $7 billion extended fund facility for Pakistan, aimed at stabilising the country’s struggling economy. This deal marks Pakistan’s 25th IMF program since 1958.

Pakistan Secures $7 Billion Imf Deal Amid Economic Reforms

As Sri Lanka grapples with an economic crisis, the newly elected President, Anura Kumara Dissanayake is taking decisive steps to reshape the country's financial future. In a televised address...president Dissanayake called for immediate talks with the IMF regarding a crucial $2.9 billion bailout.

Sri Lanka President Dissanayake Urges Immediate Talks With IMF

The International Monetary Fund (IMF) has officially approved a substantial bailout package worth $7 billion for Pakistan, a move aimed at stabilising the country’s struggling economy. This decision comes at a critical time as Pakistan grapples with soaring inflation and dwindling foreign reserves. The approval was confirmed by the IMF's Executive Board, which is set to release the first tranche of approximately $1.1 billion within a month as detailed in a report by the Press Trust of India.

Economic context and challenges

Pakistan's economy has faced significant challenges over the past few years, worsened by political instability, natural disasters, and the lingering effects of the COVID-19 pandemic. Inflation rates have surged to alarming levels, with reports indicating an inflation rate of around 27 per cent in August 2024. This economic strain has led to widespread discontent among the populace, with rising costs of essential goods and services impacting daily life.

The IMF’s decision to approve this bailout is seen as a crucial step towards restoring financial stability in Pakistan. The funds will be utilised to bolster foreign reserves and support critical public services, which have been under severe pressure due to budget constraints. Furthermore, the bailout is expected to facilitate ongoing negotiations with other international creditors and investors, fostering a more conducive environment for economic recovery.

Prime Minister Shehbaz Sharif stated that this would be the last IMF program for Pakistan, crediting Deputy Prime Minister Ishaq Dar and the finance team for their efforts. The loan will carry an interest rate of approximately 5 per cent according to the report.&nbsp;

Conditions attached to the bailout

As part of the agreement, the IMF has outlined several conditions that Pakistan must adhere to, in order to, access the full extent of the bailout package. These conditions include implementing fiscal reforms aimed at increasing government revenue, reducing budget deficits, and enhancing transparency in public spending. The Pakistan&nbsp;government is also expected to take measures to strengthen its monetary policy framework and improve its overall economic governance.

The approval of this bailout package comes after extensive negotiations between Pakistani officials and IMF representatives, reflecting a commitment from both sides to work collaboratively toward addressing the country’s economic woes. The Pakistani Finance Minister expressed optimism regarding the approval, stating that it would pave the way for sustainable economic growth and development.

International reactions and implications

The international community has welcomed the IMF's decision, viewing it as a positive signal for Pakistan's economic future. Analysts believe that this financial support will not only help stabilise the economy but also restore investor confidence in Pakistan’s markets. The successful implementation of reforms linked to the bailout could potentially unlock further financial assistance from other multilateral institutions.

However, challenges remain on the horizon. The Pakistani government must navigate complex political dynamics while implementing necessary reforms that may not be popular among certain segments of society. Public protests against serious economic measures have already begun surfacing, signalling potential unrest as citizens react to changes that could affect their livelihoods.

Further, the IMF forced Pakistan to first bridge a USD 2 billion additional financing gap for qualifying the board approval. Pakistan had to take the most expensive commercial loan in its history at an 11 per cent interest rate from the Standard Chartered Bank to meet the financing gap. The Asian Development Bank warned on Wednesday that the rising political and institutional tensions may make it difficult to implement the reforms that Pakistan has committed to deliver to the IMF. The ADB said these reforms were crucial to ensure that external lenders keep lending to Pakistan.

Hence, the IMF's approval of a $7 billion bailout for Pakistan marks a pivotal moment in the country’s economic journey. With immediate financial relief on the way, all eyes will be on the government as it embarks on a path toward reform and recovery. The coming months will be critical in determining whether these efforts can translate into lasting economic stability and growth for the nation.

The International Monetary Fund (IMF) has officially approved a substantial bailout package worth $7 billion for Pakistan, a move aimed at stabilising the country’s struggling economy.

The International Monetary Fund (IMF) has officially approved a substantial bailout package worth $7 billion for Pakistan, a move aimed at stabilising the country’s struggling economy. This decision comes at a critical time as Pakistan grapples with soaring inflation and dwindling foreign reserves. The approval was confirmed by the IMF's Executive Board, which is set to release the first tranche of approximately $1.1 billion within a month as detailed in a report by the Press Trust of India. Economic context and challenges Pakistan's economy has faced significant challenges over the past few years, worsened by political instability, natural disasters, and the lingering effects of the COVID-19 pandemic. Inflation rates have surged to alarming levels, with reports indicating an inflation rate of around 27 per cent in August 2024. This economic strain has led to widespread discontent among the populace, with rising costs of essential goods and services impacting daily life. The IMF’s decision to approve this bailout is seen as a crucial step towards restoring financial stability in Pakistan. The funds will be utilised to bolster foreign reserves and support critical public services, which have been under severe pressure due to budget constraints. Furthermore, the bailout is expected to facilitate ongoing negotiations with other international creditors and investors, fostering a more conducive environment for economic recovery. Prime Minister Shehbaz Sharif stated that this would be the last IMF program for Pakistan, crediting Deputy Prime Minister Ishaq Dar and the finance team for their efforts. The loan will carry an interest rate of approximately 5 per cent according to the report. Conditions attached to the bailout As part of the agreement, the IMF has outlined several conditions that Pakistan must adhere to, in order to, access the full extent of the bailout package. These conditions include implementing fiscal reforms aimed at increasing government revenue, reducing budget deficits, and enhancing transparency in public spending. The Pakistan government is also expected to take measures to strengthen its monetary policy framework and improve its overall economic governance. The approval of this bailout package comes after extensive negotiations between Pakistani officials and IMF representatives, reflecting a commitment from both sides to work collaboratively toward addressing the country’s economic woes. The Pakistani Finance Minister expressed optimism regarding the approval, stating that it would pave the way for sustainable economic growth and development. International reactions and implications The international community has welcomed the IMF's decision, viewing it as a positive signal for Pakistan's economic future. Analysts believe that this financial support will not only help stabilise the economy but also restore investor confidence in Pakistan’s markets. The successful implementation of reforms linked to the bailout could potentially unlock further financial assistance from other multilateral institutions. However, challenges remain on the horizon. The Pakistani government must navigate complex political dynamics while implementing necessary reforms that may not be popular among certain segments of society. Public protests against serious economic measures have already begun surfacing, signalling potential unrest as citizens react to changes that could affect their livelihoods. Further, the IMF forced Pakistan to first bridge a USD 2 billion additional financing gap for qualifying the board approval. Pakistan had to take the most expensive commercial loan in its history at an 11 per cent interest rate from the Standard Chartered Bank to meet the financing gap. The Asian Development Bank warned on Wednesday that the rising political and institutional tensions may make it difficult to implement the reforms that Pakistan has committed to deliver to the IMF. The ADB said these reforms were crucial to ensure that external lenders keep lending to Pakistan. Hence, the IMF's approval of a $7 billion bailout for Pakistan marks a pivotal moment in the country’s economic journey. With immediate financial relief on the way, all eyes will be on the government as it embarks on a path toward reform and recovery. The coming months will be critical in determining whether these efforts can translate into lasting economic stability and growth for the nation.

IMF approves $7 billion bailout for Pakistan amid economic challenges

Russia's economic growth has defied IMF estimates. The country grew by 4.4% in 2024. This despite multiple sanctions imposed by U.S. & allies. But what's really driving the Russian economy? Take a look at this report for more...

Russia's GDP Soars Amid Rising Defence Spending

The International Monetary Fund (IMF) has approved a $7 billion loan for Pakistan, over two months after reaching an agreement. Prime Minister Shehbaz Sharif on Wednesday praised the deal, thanking IMF chief Kristalina Georgieva and her team for their support.

Pakistan: IMF Approves $7 Billion Loan For Cash Starved Country

Russia’s economy has defied expectations, growing by 4.4 percent in the first seven months of 2023 despite facing multiple western sanctions. This is significantly higher than the 3.2 percent growth forecasted by the IMF.

It is within this fiscally tight macroeconomic context that governments have to navigate multiple competing priorities against an increasingly complicated backdrop. "Public debt and deficits are increasing to dangerous levels, global growth is slowing, and interest-rate trajectories remain uncertain," argues Vitor Gaspar, Director of the International Monetary Fund's (IMF) fiscal affairs department.

He detailed his views on the platform of "Foreign Policy". The current economic environment reminds him of the early part of the 1980s' economic chaos, especially in the aftermath of an intensive anti-inflation program.

But things are very different in the contemporary scenario. Conceding alongside these other variables are the mega-existing worldwide issues such as climate change an aging population and persisting challenges of poverty and inequality. This will only keep hounding the government kitty. Public demand for fiscal restraint has declined in the last two decades; populism has contributed to a weakened call for government financial discipline.

The three challenges that governments globally need to deal with<o:p></o:p>

This has created a fiscal policy trilemma. There are three conflicting pressures governments have to choose from. There are growing demands for increased spending on areas such as defense and climate action; they cannot increase taxes; and countries need to address the rising public debt and deficits threatening financial stability.

These three constraints are difficult to square. For instance, a government can choose to reduce its debt but refuse to introduce tax rises. Then it would have to slash public spending and in most cases, this is far from being a highly popular move. Ultimately, it results in social and political disruptions. It can spend more without raising taxes, further surging down the debt and deficits and thus threatening fiscal health. Even the most developed and developing economies are fighting this complex tug of war.

It is to be noted that, in the early 1980s, similar fiscal challenges were faced by emerging markets. Further, if things are not managed properly by the leading economies, then it can trigger another global debt crisis. This is the challenge policymakers are faced with; but how do they navigate this course without repeating history?

Over the 80 years of its existence, much has transformed in the IMF's world of international macroeconomics. From Keynesian principles calling for an interventionist regime in macroeconomics, the IMF has experienced many changes and shifts. Inflation sprees in the 1970s and early 1980s created a new challenge, focusing on the independence of monetary policy by inflation targeting, as in New Zealand since 1989.

Such is the nature of economic thought, and this has contributed to a change in policy around Europe to adopt monetary union frameworks. While fiscal policy continues, at least in structural areas concerning topics like inequality and growth, as central, it was no longer nearly the business cycle stabilizer of yesteryear. To successfully work under such pressures governments must operate within the framework of a fiscal policy and focus on resolving the current trilemma by taking proper steps. 

&nbsp;

It is within this fiscally tight macroeconomic context that governments have to navigate multiple competing priorities against an increasingly complicated backdrop.

It is within this fiscally tight macroeconomic context that governments have to navigate multiple competing priorities against an increasingly complicated backdrop. "Public debt and deficits are increasing to dangerous levels, global growth is slowing, and interest-rate trajectories remain uncertain," argues Vitor Gaspar, Director of the International Monetary Fund's (IMF) fiscal affairs department. He detailed his views on the platform of "Foreign Policy". The current economic environment reminds him of the early part of the 1980s' economic chaos, especially in the aftermath of an intensive anti-inflation program. But things are very different in the contemporary scenario. Conceding alongside these other variables are the mega-existing worldwide issues such as climate change an aging population and persisting challenges of poverty and inequality. This will only keep hounding the government kitty. Public demand for fiscal restraint has declined in the last two decades; populism has contributed to a weakened call for government financial discipline. The three challenges that governments globally need to deal with This has created a fiscal policy trilemma. There are three conflicting pressures governments have to choose from. There are growing demands for increased spending on areas such as defense and climate action; they cannot increase taxes; and countries need to address the rising public debt and deficits threatening financial stability. These three constraints are difficult to square. For instance, a government can choose to reduce its debt but refuse to introduce tax rises. Then it would have to slash public spending and in most cases, this is far from being a highly popular move. Ultimately, it results in social and political disruptions. It can spend more without raising taxes, further surging down the debt and deficits and thus threatening fiscal health. Even the most developed and developing economies are fighting this complex tug of war. It is to be noted that, in the early 1980s, similar fiscal challenges were faced by emerging markets. Further, if things are not managed properly by the leading economies, then it can trigger another global debt crisis. This is the challenge policymakers are faced with; but how do they navigate this course without repeating history? Over the 80 years of its existence, much has transformed in the IMF's world of international macroeconomics. From Keynesian principles calling for an interventionist regime in macroeconomics, the IMF has experienced many changes and shifts. Inflation sprees in the 1970s and early 1980s created a new challenge, focusing on the independence of monetary policy by inflation targeting, as in New Zealand since 1989. Such is the nature of economic thought, and this has contributed to a change in policy around Europe to adopt monetary union frameworks. While fiscal policy continues, at least in structural areas concerning topics like inequality and growth, as central, it was no longer nearly the business cycle stabilizer of yesteryear. To successfully work under such pressures governments must operate within the framework of a fiscal policy and focus on resolving the current trilemma by taking proper steps.

Navigating the global fiscal trilemma: Spend more, tax less, manage debt

A recent IMF study examining 65 countries over six decades reveals a striking trend: Political parties across the spectrum are increasingly advocating for higher government spending. This shift challenges traditional notions of conservative fiscal policy. It also highlights a growing consensus on expansionary approaches. Take a look at this report for more.

Political Parties Show Increased Support for Public Spending

The International Monetary Fund is ready to discuss its controversial $2.9 billion bailout programme for Sri Lanka with the country's new government, a spokesman said.

Anura Kumara Dissanayake, sworn in Monday as the country's first leftist president, has said he wants to renegotiate the deal, which has brought unpopular austerity measures.

"We look forward to working together with President Dissanayake... towards building on the hard-won gains that have helped put Sri Lanka on a path to economic recovery," an IMF spokesperson in Washington said Monday.

The lender of last resort noted that the South Asian nation, which defaulted on its debt in April 2022, had stabilised since the bailout.

"We will discuss the timing of the third review of the IMF-supported programme with the new administration as soon as practicable," the spokesperson said referring to the periodic review of the bailout.

A senior aide of the new president told AFP a day after the election that his People's Liberation Front party will "not tear up" the IMF deal.

"Our plan is to engage with the IMF and introduce certain amendments," Bimal Ratnayake said.&nbsp;

"We will not tear up the IMF programme. It is a binding document, but there is a provision to renegotiate."

Sri Lanka's tiny stock market fell sharply within the first few minutes of trading on Monday, when Dissanayake took office, but recovered quickly and ended the day with the main All Share Price index 1.19 percent higher.

Dissanayake has pledged to reduce income taxes that were doubled by his predecessor Ranil Wickremesinghe, and also slash sales taxes on food and medicines.

"We think we can get those reductions into the programme and continue with the four-year bailout programme," Ratnayake said.

Dissanayake's rivals had raised fears that his Marxist party would scrap the IMF programme and push the country back into an economic crisis similar to the chaos of 2022.

A foreign exchange crisis led to shortages of essentials sparking street protests which eventually forced then leader Gotabaya Rajapaksa to flee the country and resign.

Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION audience.

The International Monetary Fund is ready to discuss its controversial $2.9 billion bailout programme for Sri Lanka with the country's new government, a spokesman said.

The International Monetary Fund is ready to discuss its controversial $2.9 billion bailout programme for Sri Lanka with the country's new government, a spokesman said. Anura Kumara Dissanayake, sworn in Monday as the country's first leftist president, has said he wants to renegotiate the deal, which has brought unpopular austerity measures. "We look forward to working together with President Dissanayake... towards building on the hard-won gains that have helped put Sri Lanka on a path to economic recovery," an IMF spokesperson in Washington said Monday. The lender of last resort noted that the South Asian nation, which defaulted on its debt in April 2022, had stabilised since the bailout. "We will discuss the timing of the third review of the IMF-supported programme with the new administration as soon as practicable," the spokesperson said referring to the periodic review of the bailout. A senior aide of the new president told AFP a day after the election that his People's Liberation Front party will "not tear up" the IMF deal. "Our plan is to engage with the IMF and introduce certain amendments," Bimal Ratnayake said. "We will not tear up the IMF programme. It is a binding document, but there is a provision to renegotiate." Sri Lanka's tiny stock market fell sharply within the first few minutes of trading on Monday, when Dissanayake took office, but recovered quickly and ended the day with the main All Share Price index 1.19 percent higher. Dissanayake has pledged to reduce income taxes that were doubled by his predecessor Ranil Wickremesinghe, and also slash sales taxes on food and medicines. "We think we can get those reductions into the programme and continue with the four-year bailout programme," Ratnayake said. Dissanayake's rivals had raised fears that his Marxist party would scrap the IMF programme and push the country back into an economic crisis similar to the chaos of 2022. A foreign exchange crisis led to shortages of essentials sparking street protests which eventually forced then leader Gotabaya Rajapaksa to flee the country and resign. Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION audience.

Ready to talk about bailout programme with Sri Lanka's new leftist government, says IMF

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