<\/p>\n
The Fund says higher energy and food prices, tighter financial conditions and heightened uncertainty are triggering renewed calls for fiscal support. But it cautions that governments must strike a careful balance between shielding vulnerable households and preserving market price signals, especially where debt levels are already elevated.<\/p>\n
<\/p>\n
According to the IMF, the world entered this latest shock in a weak starting position. The pandemic, the 2022 energy and food price surge and rising trade disruptions left many governments with higher debt, thinner buffers and delayed fiscal adjustment. Even as global growth strengthened in 2025, fiscal repair did not keep pace.<\/p>\n
<\/p>\n
The Fund estimates the global fiscal deficit remained at 5% of GDP in 2025. Gross public debt rose to 94% of GDP and is projected to reach 100% by 2029, one year earlier than expected. Interest costs have increased sharply, climbing from about 2% to nearly 3% of GDP in just four years, further squeezing budgets.<\/p>\n
<\/p>\n
The IMF notes that today\u2019s fiscal pressures are increasingly structural rather than temporary. Rising security spending, the costs of climate and energy transition and growing interest bills are placing persistent demands on public finances, while revenues have not kept up. In such conditions, waiting for growth to close deficits is a risky strategy, the Fund says.<\/p>\n
<\/p>\n
Risks could intensify if the conflict drags on. The Fiscal Monitor includes a severe scenario that assumes oil prices remain 100% higher than projected in 2027, inflation pressures return and financing conditions tighten. Under that outcome, \u201cdebt-at-risk\u201d could exceed 120% of GDP, up from 117% in the IMF\u2019s reference scenario, with the largest increases concentrated in emerging and developing economies.<\/p>\n
<\/p>\n
Beyond the war, the IMF flags wider threats, including trade and financial fragmentation, political instability, abrupt market repricing and the challenge of placing growing debt issuance with private investors as central banks unwind their balance sheets.<\/p>\n
<\/p>\n
–IMF\/ChannelAfrica–<\/p>\n","protected":false},"featured_media":32073,"template":"","meta":{"_acf_changed":false,"_links_to":"","_links_to_target":""},"news-type":[44],"class_list":["post-32072","news","type-news","status-publish","has-post-thumbnail","hentry","news-type-finance","entry"],"acf":{"short_description":"The war in the Middle East is adding fresh strain to government budgets at a time when public finances are already weakened by years of overlapping shocks, the International Monetary Fund (IMF) has warned in its latest Fiscal Monitor.","published_date":"","news_description":"The war in the Middle East is adding fresh strain to government budgets at a time when public finances are already weakened by years of overlapping shocks, the International Monetary Fund (IMF) has warned in its latest Fiscal Monitor.","form_embed":"","author":"","image_caption":""},"_links":{"self":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/32072","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news"}],"about":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/types\/news"}],"version-history":[{"count":4,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/32072\/revisions"}],"predecessor-version":[{"id":32081,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/32072\/revisions\/32081"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media\/32073"}],"wp:attachment":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media?parent=32072"}],"wp:term":[{"taxonomy":"news-type","embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news-type?post=32072"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}