‘Great financing divide’ between rich, poor nations slows recovery – IMF

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FILE PHOTO: The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. Businesshala / Yuri Gripas
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WASHINGTON (Businesshala) – Economic growth in poor countries will likely fall below pre-pandemic expectations for years, given gaps in vaccination rates, revenue growth and borrowing capacity, the International Monetary Fund said in its financial monitoring report released on Wednesday. said in.

The report showed that global debt levels rose to $226 trillion in 2020, a jump of $27 trillion in just one year from the $20 trillion cumulative gains seen over the two years during the global financial crises of 2008 and 2009. is more.

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About 90% of that growth came from advanced economies, with China, with emerging and developing economies not able to access financial markets for its spending needs, and also more vulnerable to potential interest rate hikes, Vitor Gaspar, the IMF’s head of financial policy, told Businesshala in an interview.

“The great vaccine divide, climate change, and the great financing divide are global problems that demand global action,” he said, warning that low-income countries face complex challenges that will cripple development for years. can slow down the possibilities.

Gasper said the pandemic had widened an “already substantial” financing gap facing low-income countries before the crisis, adding that emerging and developing economies were also more sensitive to changes in global interest rates.

This means that once central banks begin to withdraw monetary support seen during the pandemic, they may borrow faster than expected, the report said.

Global government debt has stabilized at a record $88 trillion, less than 100% of GDP, with fiscal and economic growth broadly based on local vaccination rates, the stage of the pandemic and the ability of governments to reach low costs. differ from. Borrow

Overall, the report said, an estimated 65 million more people will fall into poverty by the end of 2021 than would have been the case without the pandemic.

Reporting by Andrea Schallal; Editing by Christian Schmollinger

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