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IMF urges Italy, France, Spain to ‘buckle up’ on debt


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The International Monetary Fund (IMF) chief mentioned Italy, France and Spain should do extra to sort out rising debt and deficit ranges, flagging “very modest” European development within the post-COVID-19 local weather.

“These three countries have seen their debt-to-GDP ratios jump significantly,” Kristalina Georgieva mentioned in an interview with a number of newspapers, in accordance with a transcript revealed Thursday by Italy’s Corriere della Sera.

“Their fiscal response to COVID was appropriately very strong, but it led to increasing debt and deficit levels. So now they truly have to buckle up and go for fiscal adjustments.”

For Italy, “the problem is compounded by the slowing of growth as a result of withdrawal of policy support measures,” she mentioned.

“The budget for Italy should be strengthened: the fiscal adjustment Italy is taking is not going to work fast enough to bring deficits and debt levels down,” she mentioned.

Noting that France is “in a better position because growth there is more accommodating for fiscal adjustment,” the IMF managing director however mentioned, “2024 has to be a turning page for France in terms of tightening.”

Spain, which “benefited from a big rebound of services and tourism,” is forecasting a 0.3% adjustment, which she says the IMF considers acceptable as long as it “does not renew the policy support measures that are expected to expire at the end of this year.”

Overall, she flagged considerations for financial restoration in Europe.

“Unlike the U.S., which has recovered to its pre-pandemic trend, the eurozone is still 2% below its pre-pandemic trend and growth is very modest,” she mentioned, citing the warfare in Ukraine and demographic challenges because the main components.

Asked concerning the battle between Israel and Palestine, Georgieva mentioned the worldwide financial impression has been minimal to date, however that would change if the battle is extended or intensifies.

“Economically, the most significant impact is at the epicenter of the conflict. In Gaza, the destruction is massive,” she mentioned.

“Growth in Israel is inevitably going to be affected.”

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