'Global public debt likely to touch 98% of GDP in 2020 amid Covid'

Washington: Global public debt is estimated to touch 98 per cent of GDP at the end of 2020, International Monetary Fund said on Thursday in its latest fiscal monitor update, according to which India's government debt is expected to remain elevated at 83 per cent of GDP.

The COVID-19 pandemic has posed a severe challenge to public finances, the report said noting that the contraction in output and ensuing fall in revenues, along with emergency lifelines, boosted government deficits and debts beyond levels recorded during the global financial crisis.

Vitor Gaspar, Director of the IMF's Fiscal Affairs Department told reporters that the government revenue declined everywhere, public debt jumped up to 98 per cent compared with 84 per cent before COVID-19.

"From 2021 onwards debt stabilizes at the high level, and stays elevated well above pre-COVID-19 levels up to the end of the forecasting horizon," he said.

According to the Fiscal Monitor report, India's government debt is expected to remain elevated, at 83 per cent of GDP, highlighting the need for a credible medium-term fiscal framework to enhance confidence, anchored on revised fiscal objectives and revenue mobilization.

Noting that global public debt is projected to edge up further from 98 per cent of GDP in 2020 to almost 100 per cent of GDP in 2021 driven by advanced and emerging market economies, Paolo Mauro, Deputy Director of the Fiscal Affairs Department at IMF said, with the pandemic still out of control and economies growing below potential, additional fiscal support will be necessary in 2021, to protect livelihoods.

"High public debt need not raise immediate concerns on debt sustainability, but highly indebted emerging markets and developing economies could find it challenging to borrow more. Overall, the prospects for market financing are good, but near-term debt vulnerabilities remain high in some developing countries," he said in response to a question.

To address a steep rise in public debt in developing countries, the international community including the IMF has provided grants, concessional loans, and debt relief in 2020, including for 38 countries assessed to be "at

high risk."