Tariff policies may further worsen debt levels: IMF

Washington: The International Monetary Fund (IMF) said on Wednesday that if fiscal revenues and economic output decline more significantly than curren...

Washington: The International Monetary Fund (IMF) said on Wednesday that if fiscal revenues and economic output decline more significantly than current forecasts due to rising tariffs and weakened growth prospects, debt levels may exceed existing "debt-at-risk" estimates.

"The series of recent tariff announcements by the United States, and countermeasures by other countries have increased financial market volatility, weakened growth prospects, and increased risks," IMF officials wrote in a blog post published alongside the release of the organization's latest Fiscal Monitor, stressing that current major policy shifts are exacerbating global uncertainty.

"They come in the context of rising debt levels in many countries and already strained public finances, which in many cases will also need to accommodate new and permanent increases in spending, such as defense," they said.

"Rising yields in major economies and widening spreads in emerging markets further complicate the fiscal landscape," they added.

The IMF projects global public debt to increase by 2.8 percentage points this year, pushing debt levels above 95 percent of gross domestic product (GDP).