Vitor Gaspar, director of the Fiscal Affairs Department with IMF, said “restoration of growth is a very important favorable condition to tackle the high public debt level.”
“The near-term priority is to avoid premature withdrawal of fiscal support,” he said. “Support should persist at least into 2021 to sustain the recovery and to limit long-term scarring. Health and education should be priorities everywhere.”
In response to a question from Reuters about the situation in the U.S. with any future stimulus bills still currently being in limbo, Gaspar said the U.S. does have room for further fiscal support beyond the efforts passed quickly early in the pandemic.
“The U.S. is one of the advanced economies that faces long-term public finance challenges associated with population aging, and a medium- to long-term framework would very much help tackling those issues,” he said, according to the transcript.
Meanwhile, the IMF has upgraded its global gross domestic product (GDP) forecast for the year to -4.4 percent, up from -5.2 percent in June, PYMNTS reported.
Gita Gopinath, chief economist and director of the research department at the IMF, said the world is “coming back from the depths of its collapse in the peak of this crisis, which was the first half of this year,” and that the economy is beginning to rebound at least partially.
But she noted that the crisis is “far from over,” with employment still well below what it used to be, and a polarized labor force disproportionately affecting women, minorities and the poor.
“The ascent out of this calamitous, great lockdown is likely to be long, uneven and highly uncertain,” Gopinath said. “It is therefore essential that fiscal and monetary policy support are not prematurely withdrawn as best possible.”