Washington – International Monetary Fund or the IMF has raised an alarm as the global economy faces a $164 trillion of debt ($164 lakh crore) and has blamed China and the United States for the same. Criticizing the United States and China, the world’s two largest economies, IMF has in fact praised India, the world’s sixth largest economy, for its ‘right policies’.
The IMF released the ‘Fiscal Monitor Report’ on last Wednesday. The report has a serious warning for the increasing burden of debt. It also underlines the fact that the current debt is at the highest since the World War II. IMF report also draws the attention to the point calling developed and developing economies being responsible for the current debt situation.
Blaming China and the United States for the increasing debt over the last decade, the report points out to China’s share in the debt to be at 43%. IMF has termed the proportion of debt in China’s private sector to be very high and has also mentioned that the the scale of debt-taking of Chinese private companies has increased by 75% since the financial crisis.
The IMF reports mentions the ratio of US debt reaching 108% of its GDP and expresses dissatisfaction at the US not taking steps to curb its trade deficit and debt. It is also predicted that in the next five years the ratio of US debt could reach 117% of its GDP, higher than that of even the African economies. IMF has pinpointed at the huge expenditure in the social service and health sectors over a decade and also at the tax cuts that the current US administration is offering for being the primary reasons behind rise in debt.
Along with China and the United States, the IMF has also targeted the developing economies. IMF has expressed dissatisfaction at the ratio of debt to GDP in these nations and has quoted it to average around 70%. IMF’s report advices these nations to avoid policies which will increase their debt and fiscal deficit.
Criticizing the major world economies on one hand, the IMF has praised India on the other. The IMF said that though the Indian debt stands at 70% of its GDP, the government is employing right policies to reduce it. IMF has also voiced confidence that with these policies, the Indian debt will come down to 60% of its GDP.
The IMF report also predicts the Indian economy to grow at the rate of 7.4% in the financial year 2018-19.