There is good news for advanced countries on debt, just not for Donald Trump

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Updated: April 19, 2018 12:45:29 PM

While almost all of the advanced economies are expected to lower their Debt-to-GDP ratio, United States is the only economy that is going to increase it, the Fiscal Monitor of IMF showed.

There is good news for advanced economies on debt, just not for Donald TrumpThe debt-to-GDP ratios would come down in next three to five years in most countries. (Image: Reuters)

While almost all of the advanced economies are expected to lower their Debt-to-GDP ratio, United States is the only economy that is going to increase it, the Fiscal Monitor of IMF showed. “In the United States, the revised tax code and the two-year budget agreement lead to an expansion in the level of economic activity until 2020. These measures will give rise to overall deficits above $1 trillion over the next three years, which is more than 5% of GDP,” the International Monetary Fund said.

The debt-to-GDP ratios would come down in next three to five years in most countries but it will largely depend on these countries delivering on their policy commitments. “There is no room for complacency,” the IMF said. The expected rise in debt-to-GDP ratios in the United States in next three years will add to the rising trend in government debt, bringing it to 117% of GDP in 2023.

Even as advanced economies are poised to bring down the debt, the global debt in 2016 hit a new record high of $164 trillion, the equivalent to 225% of global GDP. Both private and public debt have surged over the past decade. Of the $164 trillion, 63% is nonfinancial private sector debt, and 37% is public sector debt.

“For low-income developing countries, average public debt-to-GDP ratios are well below historic peaks, but it is important to recall that debt reduction from earlier peaks involved debt forgiveness,” the IMF said.

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