MOSCOW (Pakistan Point News / Sputnik - 28th January, 2021) The fiscal deficit of the advanced economies is expected to shrink to 8.8 percent of GDP this year, while the emerging economies' fiscal deficit will decrease to 8.6 percent of GDP after the countries had to boost fiscal support in effort to keep the economies afloat during COVID-19 pandemic, the International Monetary Fund (IMF) said on Thursday.
Last year, the fiscal deficit of the advanced economies stood at 13.3 percent of GDP, while the emerging economies had an average overall deficit of 10.3 percent, according to the IMF Fiscal Monitor Update.
"For three-quarters of advanced economies, the fiscal deficit in 2021 is expected to shrink, as pandemic-related support expires or winds down and automatic stabilizers play out. Despite new support measures, the fiscal stance in the United States is projected to tighten in 2021 amid weakness in the job market and record COVID-19 fatalities," the IMF report read.
At the same time, the government debt globally is expected to rise further this year, largely among the advanced economies and some of the emerging economies. The United States' debt is set to increase by 3.8 percentage points to 132.5 percent of GDP, while the UK's gross debt will rise by 7.5 p.p. to 110.8 percent of GDP.
As for emerging economies, China's gross debt will increase by 4.2 p.p. to 69.4 percent of GDP, while Russia's government debt will slightly narrow to 20.7 percent of GDP. Saudi Arabia will narrowly increase borrowing to almost 33 percent of GDP this year, according to IMF.
The gross debt of low-income developing countries is largely expected to remain unchanged, at 48.5 percent of GDP, the IMF figures indicated.
