IMF Urges Government Action on Debt

The International Monetary Fund says governments should take decisive action now to reduce their debt-to-GDP ratio.

Doing so while economies are expanding would give governments greater ability to borrow funds and use public spending and/or tax cuts later if needed to counter a financial downturn.

BBC News notes that the IMF’s latest economic outlook report contains veiled criticism of the Trump administration’s sweeping tax cuts. The group questions the wisdom of lowering taxes in an economy that is already experiencing very low unemployment.

The IMF says government policies should instead be “recalibrated” to lower the debt-to-GDP ratio over the medium term, exactly the opposite tack taken by the White House.

The IMF also warns that the size and opaqueness of China’s financial system continues to pose a risk to global economic stability.

Separately, the report says the global banking system is stronger than it was ahead of the financial crisis a decade ago. But it says further reform is needed.