IMF warns cutting spending too soon could derail recovery

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As governments rushed out funding to prevent an economic collapse amid the coronavirus pandemic, global public debt swelled to the highest in history, but the International Monetary Fund (IMF) warned that cutting back too soon could undermine the recovery, AFP reported.

Government spending “will need to remain supportive and flexible until a safe and durable exit from the crisis is secured,” IMF fiscal policy chief Vitor Gaspar and chief economist Gita Gopinath said in a blog post.

Even with record low interest rates worldwide, the debt figures are staggering — surpassing the size of the global economy, and deficits in advanced economies five times higher than pre-pandemic estimates for 2020.

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