Covid-19 pandemic will continue to increase the global state debt in 2021 but spending more money for accelerating of vaccination is the fastest way to begin the normalization of the state finances. Reuters reported that citing the IMF.
By 2025, the countries with developed economies might collect extra global tax revenue for the sum of more than $1 trillion. It is possible in case the fastest global vaccination allows to take the virus under control as the IMF stated in its financial monitoring for 2021.
The IMF stated that if the most favorable scenario in Fund’s predictions materializes, the world GDP volume can increase for $9 trillion during the same period of time as the enterprises will reopen and hire people faster.
“Vaccination will, thus, more than pay for itself, providing excellent value for public money invested in ramping up global vaccine production and distribution,” the IMF said in the report.
During their virtual spring meetings, the IMF and the World Bank urge the countries to continue the financial support of their economies, vulnerable citizens and businesses until the pandemic is not taken completely under control.
According to the Fund’s estimate, from the beginning of the pandemic until March 17, 2021, the governments allocated about $16 trillion for financial support due to the pandemic. It includes $10 trillion of extra expenses and foregone revenue and $6 trillion of government loans, guarantees and capital injections for businesses.
According to the Fund’s predictions, in 2021, the budget deficit in the majority of the county will reduce a little as the support due to the pandemic expires or winds down; unemployment claims drop and revenues start to recover as businesses reopen.
As we reported, World Bank President David Malpass expects China, the United States and other Group of 20 major economies to extend a freeze in bilateral debt service payments through the end of 2021.