The International Monetary Fund (IMF) issued an urgent call today, Wednesday, for advanced economies and others to reduce government spending, deficits, and debt levels, warning that delays will make these issues more difficult in the coming years.
Rodrigo Valdes, head of the Fund's financial affairs department, stated in a statement reported by CNBC Arabia and reviewed by "Video News Agency" that the increase in sovereign bond yields is adding financial pressures at a time when public debt is set to reach 100% of GDP, the highest level since World War II, leaving countries with less room for delay.
He added: "We now say that it is urgent, because conditions have changed," referring to inflationary pressures, high global debt levels, and rising sovereign bond yields.
The Fund official stated that the challenge for advanced economies with high debt levels is to build political support for concrete plans to contain borrowing costs in the medium term and mitigate spillover effects on the rest of the world.
Valdes continued in a blog on Wednesday: "The longer countries wait, the more painful the adjustments will be," noting that delaying adjustments will lead to increased financial vulnerabilities and narrow the margin of options available to policymakers.
The Fund says that financing conditions for many emerging markets and developing economies are still favorable, but this may not last.
He added: "Low-income countries, which were already facing greater constraints on external financing, need to strengthen their tax systems and improve spending efficiency."
Regarding the energy file, Valdes said that more countries are allowing the rise in energy prices to pass on to consumers, but many are still relying on extensive and costly measures to protect populations from the effects of these increases.
He noted: "We estimate that the total financial cost of these measures amounts to about 0.5% of global GDP," indicating that the continuation of these measures could push prices to rise further globally.