The world public debt will reach a historic peak in 2020, that is, a level to that registered at the end of the Second World War. The IMF says this, but the circumstances are totally different, only the need for political decisions is very similar.
The value of public debt this year will represent 101.5% of the world GDP (Gross Domestic Product), according to data released this Friday by the IMF, the International Monetary Fund.
The economists who showed up for the document, among them the former Portuguese finance minister, Vítor Gaspar, who was in the government during the “Troika” and today is the director of the IMF’s public finance department, do not hide his concern, but leave pragmatic advice.
A kind of “square of the circle” is assumed. Despite the unfavorable trajectory of public debt, the IMF recalls that “too early a fiscal adjustment presents an even greater risk of jeopardizing the recovery, with more important future budgetary costs”
For these economists, the equation is highly complex. Governments will have to stimulate economies affected by the health crisis without their debts becoming unsustainable.
Let’s go back to the end of World War II. The leader of the United States was named Franklin Delano Roosevelt, that of the United Kingdom, Winston Churchill, that of the Soviet Union, Joseph Stalin. This is just to talk about the dominant powers and forget Charles de Gaulle in France, or Chiang Kai-shek, in China.
So far the governments of the world have spent $ 11 billion on aid to families and businesses that the virus has imposed on confinement. The only way to try to contain the spread of the “covidian” Pandemic.
Interest rates – according to the IMF – will remain historically low. Which for the families can be good news, except that everything is even more dependent on the policy and the way the leaders of each country will act.
Let’s go back to the end of World War II. The leader of the United States was named Franklin Delano Roosevelt, that of the United Kingdom, Winston Churchill, that of the Soviet Union, Joseph Stalin. This is just to talk about the dominant powers and forget Charles de Gaulle in France, or Chiang Kai-shek, in China.
Political options will make the “new world”. Will we have leaders for that?
*Director at Plataforma
