By Our Reporter
Jose Luis De Haro, the Communications Officer at the International Monetary Fund (IMF), has raised concerns about the significant fiscal challenges many countries are expected to face. With global tensions on the rise and potential trade disruptions looming, there may be a pressing need for governments to boost defense spending or find ways to support their economies amid evolving trade environments.
During a recent World Economic Outlook press briefing, De Haro pointed out that the world’s poorest nations are particularly at risk. These countries, already dealing with high debt levels and facing a decline in official aid, could encounter heightened chances of debt distress. Despite urgent needs for increased spending, debt levels remain high globally.
To tackle this uneasy situation, it’s crucial for countries to create fiscal space through structural reforms. De Haro emphasized the necessity of ensuring that financial support is temporary and specifically targeted to avoid long-term fiscal instability, warning that “it is easier to turn on the fiscal tap than to turn it off.”
In situations where new spending is permanent, like ongoing defense obligations, governments will need to strategize either by cutting expenditures in other areas or finding new revenue sources. Failing to implement such measures may jeopardize long-term fiscal sustainability.
In closing, De Haro acknowledged the validity of some critiques concerning the global trading system. He urged for international cooperation to reform this system so that it serves all nations better and fosters fairer opportunities on a global scale.