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

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WASHINGTON, Oct 13 (Reuters) – Economic progress in poorer nations will possible lag pre-pandemic expectations for years, given gaps in vaccination charges, income progress and the flexibility to borrow, the International Monetary Fund stated in its Fiscal Monitor report launched on Wednesday.

Global debt ranges elevated to a document $226 trillion in 2020, a $27 trillion soar in only one yr that far exceeds the $20 trillion cumulative acquire seen over the 2 years throughout the international monetary disaster of 2008 and 2009, the report confirmed.

About 90% of that enhance got here from superior economies, plus China, with rising and creating economies far much less in a position to entry monetary markets for his or her spending wants, and likewise extra weak to doable rate of interest rises, Vitor Gaspar, the IMF’s head of fiscal coverage, advised Reuters 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 compounding challenges that could slow growth prospects for years.

The pandemic has exacerbated the “already appreciable” financing gaps facing low-income countries before the crisis, Gaspar said, adding that emerging and developing economies were also more vulnerable to changes in global interest rates.

That meant they could see borrowing costs rise faster than expected once central banks start to remove monetary support seen during the pandemic, the report said.

Global government debt has stabilized at a record $88 trillion, just below 100% of gross domestic product, with fiscal and economic developments varying widely, depending on local vaccination rates, the stage of the pandemic, and the ability of governments to access low-cost borrowing.

Overall, the report said, an estimated 65 million to 75 million more people will fall into poverty by the end of 2021 than would have been the case without the pandemic.

Reporting by Andrea Shalal; Editing by Christian Schmollinger

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