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IMF: Public Debt Hurts Citizens

POSTED ON June 28, 2024 •   Business      BY Abiodun Saheed Omodara
International Monetary Fund (IMF) l Credit: Photo File

The Director of the International Economics section at the International Monetary Fund (IMF), Mark Aguiar,  has highlighted the negative impact of sovereign borrowing on citizens, citing increased volatility and decreased investment as key concerns. 

In a recent report on the IMF's website, he emphasized that contrary to popular belief, public debt does not necessarily fund investment or support national budget deficits. 

The report analyzed the debt trends of 52 developing and emerging market economies over the past two decades, revealing that countries with high debt levels tend to experience slower growth rates. 

The data also indicated that public borrowing tends to crowd out private investment and hinder economic growth. 

Additionally, countries with excessive borrowing exhibited higher volatility in government expenditure and private consumption compared to those with more prudent borrowing practices.

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