By Emma Ujah, Abuja Bureau Chief
The COVID-19 pandemic pushed global debt to a record $255 trillion in 2020, according to the International Monetary Fund (IMF).
The Director, Fiscal Affairs Department of the Fund, Mr. Victor Gaspar, disclosed this during a virtual press conference, on the Fiscal Monitor, as part of the on-going World Bank/ IMF Annual Meetings, in Washington.
His words, “Because of COVID-19 and policies put in place to respond to it, debt levels increased to high levels. High and rising level s of public and private debts are associated with risks, financial stability and public finances.
“I want to start with global debt. Given that we now have preliminary data for global debt for 2020. Global debt has risen to 256 trillion in 2020. That is $27 trillion above the level in 2019. This increase is by far the largest on record.
“Advanced Economies and China contributed more than 90 per cent to the accumulation of the worldwide debt in 2020. The remaining Emerging markets and Low-Income , developing countries contributed only around 10 percent.”
Increase in public debt in 2020, according to him, was justified by the need to respond to COVID-19 and the need to reduce its social and economic consequences.
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Mr. Gaspar said, however, that debt was expected to decline this year and next. He said that policy advice must be tailored toward the evolution of the pandemic with economic development and prospects, as well as, country characteristics.
The director said that advanced economies had the prospects of soon returning to pre-COVID growth, with China and the United States of America, standing out with early and strong recovery.
In contrast, he said that many Low-Income and Developing Countries would suffer persistent negative growth relative to the pre-COVID prospects, driven by shortfalls in revenue, which would aggravate poverty .
Mr. Gaspar identified global challenges facing humanity at present as: the Great Finance Divide, Great Vaccine Divide and climate change, requiring global action.
He said that global recovery remained uncertain and held back by the availability of vaccines.
According to him, the IMF and other international organizations have put out a plan with a price tag of $50 billion with the objective of vaccinating at least 40 per cent of the population of every country before the end of this year.
He said that the decision was taken because it was estimated that the failure to contain the epidemic could cause the world in excess of $5 trillion over the next five years.
Vanguard News Nigeria