Government debt and fiscal deficits are expected to surge in 2020 & 2021. The public debt could cross 100 percent of the GDP in 2020- 2021 and the fiscal deficits to rise to 14 percent of the GDP in 2020. This indicates that the public debt and fiscal deficits have never risen this high and quick.
According to Victor Gaspar the director of international monetary funds, the decrease in output that results in a decline of revenue with sizable, optional help has led to an increase in public debts and deficits. The global public debt could cross 100 percent of the GDP in 2020-2021 because the rise in debt is happening in most advanced economies like Japan, the US, and those in Europe. The average overall fiscal deficit is expected an increase by 10 percent comparing to that of last year.
Even though global public deficits are high the nominal interest rates are low in both developed and developing market economies. The interest rates ate expected to remain low until any inflation comes up. Much of the time, this opens an impressive space to move, when monetary help is required. In developed economies, high debt levels come along with decreasing debt services costs.
The developed economies face long term fiscal pressure particularly because of the population maturing, which may burden the sustainability of long term debt. The conditions might be difficult in developing market economies if the financial conditions are tightened again, like what happened in March.
Also, the most low-salary creating economies, a considerable lot of which were at that point confronting high debt issues before the crisis, will require continued help from the worldwide network to guarantee that they can react to the pandemic and contain the ascent of destitution and imbalance. The G20 Debt Service Suspension Initiative for the provisions of debts relief good example of nationwide integration. The country which first faced the pandemic China is now recovering. The authorities took enough measures after the outbreak and provided financial support to the healthcare sector. This alone won’t be enough much more is required for the recovery. We all should fight together and offer our help during this pandemic and overcome this situation.
