Arab Today, arab today imf countries with high public debt must support economic growth change spending taxation
Last Updated : GMT 05:53:48
Arab Today, arab today
Arab Today, arab today

IMF: Countries with high public debt must support economic growth, change spending, taxation

Arab Today, arab today

Arab Today, arab today IMF: Countries with high public debt must support economic growth, change spending, taxation

Washington - KUNA

Countries battling high public debt must combine policies that support economic growth with lasting changes in government spending and taxation, concludes a new study released on Thursday by the International Monetary Fund. A chapter in the IMF\'s \"World Economic Outlook\" notes that public debt has surpassed 100 percent of gross domestic product (GDP) in Japan, the United States and several European countries in recent years. This is especially worrying because of the low growth, persistent budget deficits and looming liabilities due to aging populations in these countries, the reported noted. A result, particularly in Europe, has been ratings downgrades and higher borrowing costs, it said. The report offers lessons after close examination of six case studies of advanced economies in which public debt exceeded the threshold of 100 percent of GDP, spanning a century of experience. The cases -- Great Britain (1918), the United States (1946), Belgium (1983), Canada (1995), Italy (1992) and Japan (1997) -- cover the two postwar eras and the most recent era of peacetime debt buildup. In Japan, weak growth prevented fiscal consolidation. Debt continued to climb until the authorities addressed weaknesses in the banking system and corporate sector that limited the efficacy of monetary policy, the report noted. In Belgium, Canada and Italy, debt did not fall until monetary conditions were supportive. These countries all implemented large fiscal adjustments. But it was only after real interest rates fell that all three countries were able to reduce their debt, the report said. In some cases, reforms to wage-setting mechanisms broke a wage-price spiral. And exchange rate depreciation supported external demand and growth. The case of Britain offers a cautionary lesson for countries contemplating internal devaluation today, the report said. The British government combined tight monetary policy and severe fiscal austerity to cut the price level and return the pound to prewar parities. The results were disastrous: unemployment increased, growth remained anemic and debt continued to rise, the report said. This shows that a reduction in the price level, a necessary part of internal devaluation, comes at a high cost. But determining whether the cost from internal devaluation is greater than the benefit to competitiveness requires further research, it said. The U.S. experience in the immediate postwar years confirmed the importance of supportive monetary policy. Limits on nominal interest rates and bursts of inflation quickly reduced the debt ratio, while growth remained strong. But it is unclear whether such financial repression would work for countries facing high debt burdens today, the report said. Not only are advanced economies benefiting from historically low sovereign interest rates, but the inflationary consequences of financial repression could threaten the structures that have been in place in recent decades to prevent inflation, it said. While Belgium, Canada and Italy all implemented large fiscal adjustment when low inflation was seen as necessary for economic stability, their success in reducing public debt varied. The greater success of Belgium and Canada was partly attributable to the former countries putting more weight on permanent rather than temporary improvements that were Italy\'s preference, the report said. And both Belgium and Canada implemented fiscal frameworks in the 1990s that locked in the improvements achieved earlier, it noted. Only in postwar periods were deficits quickly reversed, and countries that still have high debt remain vulnerable to subsequent shocks, the study warned. For example, Belgium took 10 years to move from a deficit of 7 percent to a surplus of 4 percent. But even after relative successes, Belgium and Canada suffered sharp increases in public debt after the global financial crisis. And the supportive external environment that facilitated the earlier debt reduction success stories is absent today, the report said. Widespread fiscal cutbacks, retreat by the private sector, population aging and the aftermath of the financial crisis mean even countries that follow the guidebook will have to moderate their expectations for reducing debt, the report said.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today imf countries with high public debt must support economic growth change spending taxation Arab Today, arab today imf countries with high public debt must support economic growth change spending taxation

 



Arab Today, arab today
Arab Today, arab today Fadi explains secrets of  Nancy Ajram's newlook

GMT 18:23 2017 Friday ,24 February

Fadi explains secrets of  Nancy Ajram's newlook
Arab Today, arab today Tourist guide explains types of tourism

GMT 18:28 2017 Saturday ,25 February

Tourist guide explains types of tourism
Arab Today, arab today Expresses Algerian history by woody figures

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures
Arab Today, arab today Iran complying with nuclear deal

GMT 07:14 2017 Saturday ,25 February

Iran complying with nuclear deal
Arab Today, arab today Ayat Abaza says state TV presented major stars

GMT 03:52 2017 Sunday ,26 February

Ayat Abaza says state TV presented major stars

GMT 09:59 2017 Friday ,24 February

Baidu revenue slips anew amid ad clampdown

GMT 05:20 2017 Thursday ,23 February

WTO ratifies first multilateral trade deal

GMT 21:36 2017 Wednesday ,22 February

Opec needs to prolong cuts to eliminate surplus

GMT 16:32 2017 Wednesday ,22 February

US Treasury chief tells IMF to monitor currencies
View News in Arabic - Business: نفط وبتروكيماويات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Penguins in the age of dinos

GMT 11:44 2017 Saturday ,25 February

Penguins in the age of dinos
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today 'Constructive' Vauxhall talk with union

GMT 08:54 2017 Saturday ,25 February

'Constructive' Vauxhall talk with union
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Actress Lobna Abdel Aziz proud of her career

GMT 06:08 2017 Thursday ,23 February

Actress Lobna Abdel Aziz proud of her career
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage

GMT 07:36 2017 Wednesday ,22 February

Wafaa Amer is happy for Sherihan’s return

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 20:33 2017 Friday ,17 February

To release new antiques collection

GMT 10:20 2017 Thursday ,23 February

Brazil's top diplomat resigns

GMT 11:54 2017 Thursday ,23 February

Saudis await visitors but will they come?

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday