IMF Managing Director warns of budgetary risks during election years – Interview with AFP

The IMF “works to help countries find the best measures to keep, what they should continue and where to focus their budgetary policy,” explains the Managing Director of the Fund in an interview with AFP.

The Managing Director of the International Monetary Fund (IMF) warned on Sunday, in an interview with AFP, of the risk of budgetary slippage in the many countries affected by elections this year, with half of the world’s population being called to the polls .

“Nearly 80 countries are going to have elections and we know what is happening, the pressure that exists to spend during electoral cycles,” recalled Kristalina Georgieva, who however stressed that “countries need to replenish their budgetary cushions and manage the debt that has accumulated” to deal with the various shocks since the Covid-19 pandemic.

“The monetary policy pursued is the right one”

The global economy was more solid than expected in 2023, estimated the head of the Fund, which allowed States to make savings, but the effort must continue while “the economy should experience a soft landing”, after the inflation peak observed over the last two years.

“The monetary policy carried out is the right one, but the work is not finished. It is therefore important not to relax it too quickly or too late but also not to have a fiscal policy” going in a different direction, warned Kristalina Georgiega.

The year 2024 must be “a year where we apply the lessons learned in recent years: always being ready to face the unexpected. We must be ready for the uncertainties that will arise”, which requires margin in matters of public finances, which many States do not have after three years of repeated crises, she insisted.

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Under these conditions, the IMF “works to help countries find the best measures to keep, what they should continue and where to concentrate their fiscal policy. Because if monetary policy remains restrictive, if budgetary spending increases, this will go against the objective of reducing inflation,” warned Kristalina Georgieva.

A necessity also insofar as the debt of all countries has increased significantly, creating difficulties in the most vulnerable countries, but also in several emerging countries, facing difficulties in repaying in a context of rising rates.

“We see that debt service (the annual cost of repaying borrowed capital and interest, Editor’s note) has increased everywhere, but remains manageable in many countries, many have had the wisdom to modify the structure of their debt”, she detailed.

But “for certain countries the debt problem becomes dramatic, either because they become insolvent or because they have to spend a large part of their income on servicing the debt”, limiting their ability to invest and finance services. essential.

2024-01-15 01:47:33
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