IMF says spending on vaccines is the best way for public finances to recover

By David Lawder

WASHINGTON, Apr 7 (Reuters) – The COVID-19 pandemic will continue to grow global public debt in 2021, but spending larger sums of money to speed up vaccinations is the fastest way to start normalizing government finances, he said. on Wednesday the International Monetary Fund.

The IMF noted in its report “Fiscal Monitor 2021” that if accelerated vaccination allows the coronavirus to be controlled earlier, more than $ 1 trillion in additional tax revenue could be raised globally through 2025 in advanced economies.

If that same bullish scenario in economic forecasts materializes, world GDP could increase by $ 9 trillion during the same period, as companies reopen and hire more quickly, the IMF said.

“Thus, vaccination will more than pay for itself, providing excellent value for the public money invested in increasing vaccine production and distribution globally,” the IMF said in the report.

The Fund estimates that governments have deployed some $ 16 trillion in pandemic-related fiscal aid as of March 17 this year. This includes $ 10 trillion of additional expenses and foregone income, and $ 6 trillion of government loans, guarantees, and capital injections for businesses.

The IMF expects fiscal deficits to narrow slightly in 2021 in most countries as aid related to the pandemic expires or is reduced, jobless claims decline and revenues begin to recover as businesses return to business. open.

The average global budget deficit reached 11.7% of GDP for advanced economies in 2020 – quadrupled from 2.9% the previous year – but they should be reduced to 10.4% in 2021, the IMF said.

The deficits of emerging economies will also decline slightly in 2021, to 7.7% of GDP for emerging economies and 4.9% for low-income ones.

The global average public debt would reach a record 99% of GDP in 2021 and would stabilize at that level after increasing slightly from 97% in 2020. In the case of advanced economies, debt will reach a maximum of 122.5% this year compared to 120.1% in 2020.

(Reporting by David Lawder; Edited in Spanish by Javier Leira)