The IMF’s latest Fiscal Monitor finds that the public debt of advanced economies will remain at 100% of gross domestic product for the foreseeable future, though emerging markets should show improvement.
The head of the IMF’s Fiscal Affairs Department said Wednesday that emerging markets should reverse recent budget deficit growth.
“In the last few years, budget deficits in emerging markets have gone up. Now, this year and next, we expect them to come down. That’s mostly due to oil exporters, where we do expect a fall of the fiscal deficit by 150 billion over these two years,” said Vitor Gaspar, Director of the Fiscal Affairs Department at the IMF.
Gaspar also pointed to strategies countries can adopt to address income inequality.
“The last 30 years or so, inequality has increased in most advanced economies and in some large economies like China and India. At this point in time, you see that many people around the world are concerned that their children may not be as well-off as themselves. What we emphasize in the Fiscal Monitor is that public policies -- taxation and public expenditures -- can play a very important role making sure that the benefits from growth are widely shared.”
Gaspar said countries can also help boost productivity.
“Eliminating barriers to the growth of the most productive firms can add about one percentage point to growth over 20 years. This is a very large productivity effect. On the policy side, we emphasize that tax policy and revenue administration reforms can help countries achieve these goals.”