International Monetary: High indebtedness may slow down the recovery of countries

New York-Sana

The International Monetary Fund warned today that the high indebtedness of companies and individuals in the countries of the world may slow down the economic recovery due to the crisis caused by the Covid-19 pandemic.

The IMF said in a report on the World Economic Outlook that the debt burden could hold back growth in developed countries by 0.9 percent and emerging markets by 1.3 percent over the next three years.

The report added: Families suffering from financial pressures and fragile companies have increased in number and proportion during the Covid-19 pandemic, and will likely reduce their spending, especially in countries that suffer from ineffective procedures to cope with bankruptcy and limited budget maneuvering margins.

To avoid exacerbating problems, the Fund called on governments to adjust the pace of gradual elimination of aid and spending programs, pointing out that for the troubled sectors, governments can provide assistance to prevent bankruptcies or incentives for restructuring to avoid liquidations.

The Fund stressed that to reduce the burden on public finances, a study could be made to impose higher temporary taxes on huge profits with the aim of recovering some transfers from companies that do not need them.

He pointed out that the exceptional measures taken by governments to support their economies with the outbreak of the virus led to high levels of indebtedness in some sectors, including those most affected by the epidemic.

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