## CHAPTER 1 FISCAL POLICY UNDER PRESSURE: HIGH DEBT, RISING RISKS ## Source details **Canonical URL:** [CHAPTER 1 FISCAL POLICY UNDER PRESSURE: HIGH DEBT, RISING RISKS](https://www.imf.org/-/media/files/publications/fiscal-monitor/2026/april/english/text.pdf) ## Other formats - [Markdown version](/-/media/files/publications/fiscal-monitor/2026/april/english/text.pdf.md) - [Structured JSON version](/-/media/files/publications/fiscal-monitor/2026/april/english/text.pdf.json) --- ### Preface — Context and immediate fiscal effects of the Middle East war - War in the Middle East affects economies and markets and risks rocking public finances worldwide. - Direct and indirect fiscal channels: - Higher oil prices; increases in LNG and food prices; disruptions to tourism flows; lower regional remittances; heightened uncertainty. - Weaker activity erodes revenues; measures to cushion higher fuel and food prices raise spending or lower revenues. - Tighter financial conditions increase refinancing costs, especially for energy-importing emerging market economies as risk premia rise. - Unexpected inflation can temporarily help debt dynamics. - Historical pattern: large supply-driven oil price shocks have widened the fiscal deficit of a typical oil importer and improved the balance of a typical exporter, with wide cross-country variation. - Immediate policy priorities: - Avoid unwanted demand stimulus while monetary policy addresses inflationary effects. - Rely on automatic stabilizers and consider limited, specific support; avoid broad fiscal stimulus. - Ensure support is commensurate, targeted, temporary, focused on the most vulnerable, and preserves fiscal sustainability. - Under limited fiscal space, prioritize budget reallocation. - Avoid broad-based energy subsidies (distortionary, fiscally expensive, regressive, difficult to unwind, carry international spillovers). - International coordination is essential to prevent larger global price effects. ### Executive summary — Global fiscal trends and risks - Global debt and deficits: - Global gross government debt rose to nearly 94 percent of GDP in 2025 and, on current trajectories, will reach 100 percent by 2029. - Global debt-at-risk three years ahead stands near 117 percent of GDP. - The global fiscal gap has contracted from a cushion of more than 1 percent of GDP a decade ago to near zero today. - Interest payments rose from 2 percent to nearly 3 percent of global GDP in four years. - Global primary-deficit-to-GDP ratio currently 2.2 percent; projected to narrow modestly by 2031 by about half a percentage point. - Over the forecast horizon through 2031, global debt projected to rise by an additional 8 percentage points, reaching 100 percent in 2029. - Recent macro outcomes: - Global output grew by 3.4 percent in 2025; global headline inflation moderated to 4.1 percent (April 2026 WEO). - Global fiscal deficit remained broadly unchanged at 5 percent of GDP in 2025; gross public debt climbed to 93.9 percent of GDP, an increase of nearly 2 percentage points from 2024. - Since late February 2026, government bond yields across advanced economies have risen noticeably—UK 10-year gilt yield climbed from 4.23 percent (February 27, 2026) to 4.83 percent (April 1, 2026). ### Fiscal impact of the Middle East war and other shocks - Asymmetric fiscal impact: - Energy-importing countries, particularly low-income developing countries, face the largest costs. - Potential beneficiaries are narrower because major Gulf exporters are directly affected by the conflict. - Scenario impacts: - Even under relatively benign scenarios, the conflict threatens fiscal positions through higher commodity prices, tighter financial conditions, lower activity, and rising defense outlays. - Prolonged conflict: global debt-at-risk could increase by an additional 4 percentage points. - AI-related asset valuation correction (US stocks fall by 20 percent): global debt-at-risk could rise by 2.4 percentage points. - Protectionism, social unrest, and threats to central bank independence can widen primary deficits, lift inflation expectations, and increase risk premia. - Policy guidance reiterated: - Calibrated, targeted, temporary support consistent with monetary policy. - Avoid broad-based price subsidies; domestic fuel and gas prices should reflect international movements while protecting vulnerable households. ### Country snapshots and drivers of global debt dynamics (selected highlights) - United States: - General government deficit closed 2025 at 6.8 percent of GDP (improved from 7.9 percent in 2024). - Interest expenditures rose to 4.3 percent of GDP in 2025. - Tariff receipts reached $264 billion (0.9 percent of GDP) in 2025 (increase of 230 percent relative to the previous year). - One Big Beautiful Bill Act (July 2025) includes a one-time accounting credit of about $131 billion (0.4 percent of GDP); CBO estimates add above half a percent of GDP to the US primary deficit each year over the long term. - Medium-term: general government deficits remain in range of 7 percent–8 percent of GDP; gross debt projected to reach about 142 percent of GDP by 2031. - Treasury bills have added nearly $5 trillion to outstanding federal debt since the COVID-19 pandemic, shortening average maturity. - China: - Overall deficit widened to 7.9 percent of GDP in 2025; official headline deficit reached 4 percent of GDP. - Multiyear local government debt swap program amounting to RMB 10 trillion (about 7 percent of GDP). - Medium-term: general government debt projected to increase from 99.2 percent of GDP in 2025 to almost 127 percent by 2031; primary deficits forecast in range of 6 percent–7 percent of GDP. - Japan: - Debt-ratio decline driven by interest costs remaining below nominal GDP growth; projected decline of about 14 percentage points supported by strong nominal growth. - Sovereign yields rose to decade-high levels: 10-year yield reached 2 percent; 30-year yield reached 3.4 percent in December 2025. - Europe and advanced economies: - Several EU members activated escape clauses to accommodate rising defense spending. - Advanced economies excluding US headline deficit in 2025: 2.4 percent of GDP; debt-to-GDP ratio: 95.3 percent in 2025. - Country projections: Spain and Japan projected to see debt ratios fall by 10 to 14 percentage points by 2031; Belgium projected to exceed 122 percent of GDP by 2031; Korea projected to reach 63 percent of GDP by 2031. - Emerging markets and frontier markets: - 2025 headline deficit widened to 4.7 percent of GDP; interest payments reached 3.8 percent of GDP. - Aggregate debt-to-GDP ratio for group climbed to 57.5 percent. - Issuance volumes halved and maturities shortened sharply for lower-rated borrowers; for B-rated economies issuance fell to nearly one-third of its 2017 level; average maturities shortened from 16 years to 8 years for lower-rated issuers. - Low-income developing countries (LIDCs): - Tax revenues increased to 11.3 percent of GDP (from 10.7 percent in 2024) in 2025. - Interest payments reached 2.3 percent of GDP, nearly 15 percent of total revenue. - Aggregate debt-to-GDP ratio declined to 48.2 percent in 2025. - Aggregate ODA fell from 1.8 percent of GDP in 2024 to 1.5 percent in 2025 (survey of 58 economies); nearly half of decline expected to translate directly into financing shortfall. - Medium-term: aggregate public-debt ratio among LIDCs projected to fall to 44 percent of GDP by 2031. ### Market structure, transmission, and vulnerabilities - Shift toward private (often leveraged) investors as central banks unwind balance sheets; hedge funds larger in intermediation. - Increase in US Treasury supply compressing safety premium; supply-driven increases in US yields spill over almost one for one to foreign bond markets. - Shortening of maturities in some systemic economies increases rollover exposure. - Empirical quantifications: - Monetary policy shock (one standard deviation) yields response of 4.07 percentage points of GDP on debt-to-GDP ratio 20 quarters after the shock in a high–short-term-debt scenario. - A 1 basis point increase in US yields after Treasury supply shock raises foreign 10-year yields by 0.8–0.9 basis point and depresses foreign industrial production by about 0.4 percent after one year. - Representative simulated changes in debt-to-GDP one year after a 2 percentage point short-term rate increase: 1.1, 1.4, 2.0, 2.7, 2.4, 2.7, 4.1, 5.4 (percentage points) across scenarios. - Convenience yield of US Treasuries has eroded; three-month convenience yield turned negative starting in 2024. ### Scenarios and quantified downside risks - Prolonged Middle East conflict (April 2026 WEO severe scenario): - Global GDP level lower by 2.3 percent in 2027; global inflation higher by 2.6 percentage points by 2027. - Under that scenario, 95th percentile of global three-year-ahead debt distribution increases by 4.0 percentage points of GDP relative to reference. - Distribution of change in three-year-ahead upside debt risks (percent of GDP): World 4.0; Advanced economies (AEs) 2.8; EMDEs 6.2. - AI-related adverse scenario: - US equities fall by 20 percent; upside global debt risks rise by 2.4 percentage points of GDP (World 2.4; AEs 0.6; EMDEs 3.5). - Right-tail distribution: roughly 20 percentage point difference between median projections and adverse outcomes three years ahead. ### Drivers decomposition (2025–31) — annual-average contributions to increase in global government debt (percent of global GDP) - Stock-flow adjustment (annual average): +1.4 - Primary deficit (annual average): +1.9 - Snowball: r (annual average): +3.1 - Snowball: g (real) (annual average): −2.4 - Snowball: π (price) (annual average): −2.6 ### Risks, vulnerabilities, and common shocks - Key risk amplifiers: - Energy shocks, geoeconomic fragmentation, policy shifts driven by national security, structural shifts in sovereign debt markets (leveraged NBFIs), slow-moving structural pressures (aging, SOE contingent liabilities), and declining ODA for LIDCs. - Quantified sensitivities: - One standard deviation oil supply shock (≈10 percent rise in WTI) raises sovereign spreads for oil-importing emerging markets by roughly 40–50 basis points. - A one standard deviation shock to the Geopolitical Fragmentation Index associated with increase in public debt ratios of about 1.5 percentage points of GDP in the medium term; EMs hit about 5 percentage points more by year 5. - A one standard deviation increase in social unrest associated with lower real GDP growth by about 0.5 percentage point and a higher primary deficit by 0.2 percentage point. ### Policy recommendations and priorities (by country group and cross-cutting) - General cross-country guidance: - Fiscal policy should be forward-looking with well-designed adjustment plans to preserve stability and reduce market pressure risk. - Allow domestic energy prices to adjust where feasible; avoid discretionary fiscal interventions that blunt price signals under supply constraints. - If support is necessary and fiscal space exists, make it temporary, well-targeted, and narrowly focused through existing transfers; avoid broad-based subsidies. - Align fiscal responses with monetary policy; avoid overly expansionary fiscal measures that force tighter monetary policy. - Where fiscal space is limited, pursue budget-neutral reprioritization to protect the vulnerable. - Commodity exporters should channel windfalls into buffers or sovereign wealth funds. - Monitor investor base composition, debt maturity profile, and convenience-yield dynamics. - Advanced economies: - Implement concrete, well-sequenced consolidation measures; credible medium-term frameworks and transparent communication. - Rationalize industrial subsidies and trade-related support while preserving growth-enhancing public investment. - Safeguard central bank independence. - United States: action on both revenue and expenditure, broaden tax base, reduce tax expenditures, address Social Security and Medicare pressures. - Euro area: reconcile defense commitments with aging pressures through reallocation; deepen single market to boost growth. - Country pointers: Canada, Belgium, Italy, United Kingdom, France, Finland, Portugal (specific efficiency and reform priorities cited). - Emerging markets: - Address contingent liabilities, phase out fiscally draining fuel subsidies, broaden tax bases, reinforce medium-term anchors, and develop local-currency bond markets. - Country examples: Chile, Brazil, Argentina, Angola, Pakistan, Sri Lanka, South Africa, Barbados, The Bahamas, Grenada, Belize. - China: - Continue near-term fiscal expansion to boost consumption and support property sector until reflation durable. - Medium term: significant consolidation, tax and social security reforms, restructuring of local government financing vehicles. - Low-income developing countries: - Build domestic revenue mobilization capacity; tax-administration reforms can yield meaningful gains. - Prioritize protecting critical social and development spending amid declining aid flows. - Consolidation of 1 percent of GDP estimated to reduce output by about 0.5 percent cumulatively after two years in sub-Saharan Africa. ### Revenue mobilization, tax administration, and China-specific social safety net findings - Tax gaps in LIDCs average about 5 percent of GDP. - Estimated revenue gains from tax-administration reforms range from 0.7 percent to 1.8 percent of GDP; selected numeric labels: 0.8 1.1 0.7 1.9 1.4 1.8 1.8 1.5 (from figure). - Country cases: - Cabo Verde increased revenues by 2.9 percent of GDP over three years via digitalization and admin reforms. - Mongolia achieved gains of 5.4 percent of GDP over five years through compliance and technology-enabled reforms. - China household saving and social spending: - China household saving rate averages about 20 percent of GDP. - Pension coverage: more than 1 billion people enrolled. - Replacement rates: urban employees exceeding 40 percent of GDP per capita; rural pensions average just 2 to 3 percent of GDP per capita. - A 1 percent increase in per capita social spending by prefectures associated with cumulative decline in rural saving rates of roughly 0.4 percentage point over two years. - Average per capita spending on health, education, and social security across prefectures ≈10 percent of GDP per capita. ### Methodology, data coverage, and timing - Estimates and projections based on data available through April 1, 2026; projections based on IMF staff assessments of current policies. - Fiscal Monitor country-group counts: 43 advanced economies, 95 EM and middle-income economies, 58 LIDCs; tables display 38 advanced economies, 40 EM and middle-income economies, and 39 LIDCs. - Projections use a mix of official budgets, IMF staff assessments, and specified country assumptions; many country-specific projection notes and treatment rules documented (examples include Russia, Saudi Arabia, United States, United Kingdom, Japan, Sudan, Zambia, Venezuela). - Data and projection tables cover 2017–31 for key fiscal indicators; methodological adjustments and country-specific coverage differences noted. ### Key exact numeric series (select items preserved verbatim) - World overall balance (Percent of GDP): 2019 –3.5 2020 –9.5 2021 –6.3 2022 –3.7 2023 –5.0 2024 –5.1 2025 –5.0 2026 –5.2 2027 –5.1 2028 –5.1 2029 –4.9 2030 –4.9 2031 –4.8 - Global gross debt (Percent of GDP): 2019 82.2 2020 97.4 2021 92.8 2022 89.2 2023 90.8 2024 92.0 2025 93.9 2026 95.3 2027 97.2 2028 98.8 2029 100.0 2030 101.2 2031 102.3 - United States gross debt (Percent of GDP): 2019 108.8 2020 132.6 2021 125.0 2022 119.1 2023 120.0 2024 122.3 2025 123.9 2026 125.8 2027 128.6 2028 132.1 2029 135.5 2030 138.9 2031 142.1 - China gross debt (Percent of GDP): 2019 59.8 2020 70.1 2021 72.1 2022 77.3 2023 84.1 2024 90.4 2025 99.2 2026 106.9 2027 112.5 2028 116.7 2029 120.3 2030 123.8 2031 126.8 - Japan gross debt (Percent of GDP): 2019 206.3 2020 228.8 2021 222.7 2022 227.8 2023 220.3 2024 214.5 2025 206.5 2026 204.4 2027 200.1 2028 197.7 2029 195.7 2030 193.9 2031 192.8 - Global debt-at-risk three years ahead (95th percentile for 2028): 117.2 percent of GDP (up from 116.6 percent in April 2025 Fiscal Monitor). - Prolonged conflict scenario: three-year-ahead upside debt risk increase = 4.0 percentage points of GDP (World), AEs 2.8, EMDEs 6.2. - AI adverse scenario: US equities fall by 20 percent → upside global debt risks rise by 2.4 percentage points of GDP (World 2.4; AEs 0.6; EMDEs 3.5). - Fiscal decomposition annual-average contributions (percent of global GDP): Stock-flow adjustment +1.4; Primary deficit +1.9; Snowball r +3.1; Snowball g (real) −2.4; Snowball π (price) −2.6. *Italic: Source — Chapter 1 and Executive Summary excerpts, Fiscal Monitor: Fiscal Policy Under Pressure: High Debt, Rising Risks (April 2026), International Monetary Fund.* ### Preface viii ### Preface viii ### Context and immediate fiscal effects of the Middle East war - The war in the Middle East is affecting economies and markets, with the potential of rocking public finances worldwide—on top of the human and economic toll in the region. - Direct and indirect channels of fiscal impact highlighted: - Higher oil prices are the most visible consequence. - Increases in liquefied natural gas (LNG) and food prices, disruptions to tourism flows, lower regional remittances, and heightened uncertainty also matter. - Weaker activity erodes revenues; measures to cushion higher fuel and food prices raise spending or lower revenues. - Tighter financial conditions increase refinancing costs, especially for energy-importing emerging market economies as risk premia rise. - Unexpected inflation can temporarily help debt dynamics. - Historical pattern noted: large supply-driven oil price shocks have widened the fiscal deficit of a typical oil importer and improved the balance of a typical exporter, though outcomes vary widely across episodes and countries. ### Policy guidance for the immediate response - Core policy priorities under current shocks: - Avoid unwanted demand stimulus while monetary policy addresses inflationary effects of the disruption. - Rely on automatic stabilizers and consider limited, specific support; broad fiscal stimulus would risk persistently higher inflation and interest rates. - Ensure support measures are commensurate with the severity of the shock, targeted and temporary, focused on the most vulnerable, and designed to preserve fiscal sustainability. - Under limited fiscal space, prioritize budget reallocation because new adverse events may arise and destabilizing government debt markets would be very harmful. - Avoid broad-based energy subsidies: they are distortionary, fiscally expensive, regressive, difficult to unwind, and carry sizable international spillovers. - International coordination and cooperation are essential to prevent larger global price effects when some countries insulate consumption from supply constraints. ### Persistent fiscal challenges and structural pressures - One year after the previous Fiscal Monitor conjunctural chapter, global fiscal conditions have progressed minimally. - Key structural pressures: - Public debt remains historically high and continues to rise. - Borrowing costs are well above prepandemic levels. - The favorable mix of low real interest rates and growth is fading. - Spending pressures are intensifying from aging populations, rising defense outlays (notably in Europe), and investment needs associated with the climate transition and energy security. - Debt dynamics: - Global public debt dynamics remain unfavorable. - Although increases in debt are concentrated in China and the United States, vulnerabilities are widespread across income levels. - Growth and debt interplay: - Stronger trend growth—driven by bolder reforms or by artificial intelligence meeting expectations—could improve fiscal dynamics by lowering r – g and strengthening the primary balance, provided spending does not rise as fast as revenues. ### Market reactions, credibility, and political economy - Markets are becoming less forgiving: - Over the past year, investors have increasingly questioned assumptions of unlimited sovereign borrowing capacity—even for large advanced economies. - Episodes of market repricing in Japan, the United States, and parts of Europe reflect heightened sensitivity to fiscal slippages and weak medium-term frameworks. - None have matched the scale of the United Kingdom’s 2022 episode, but the message is that higher debt, fiscal uncertainty, and delayed consolidation now translate more rapidly into higher borrowing costs. - Rebuilding fiscal buffers in calm periods is critical: - Crises demand emergency support, but the ability to respond depends critically on preexisting fiscal space. - Delayed consolidation after normalization leads to ratcheting up of debt ratios and raises risk of abrupt and costly adjustment later. - Credible medium-term frameworks, transparent communication, and well-designed measures that efficiently protect the vulnerable are essential to maintain fiscal sustainability. - Political economy constraints are real; consolidation requires political support and clear sequencing. ### Special challenges for low-income countries - Constraints are tightest for low-income countries: - Financing has become more expensive. - Official development assistance has declined. - Rising debt service often crowds out priority spending. - Policy priorities for low-income countries: - Strengthen domestic resource mobilization. - Reform tax policy and administration—broaden tax bases, reduce exemptions, improve compliance, and leverage digital technologies. - Improve spending quality and efficiency. - Strengthen public investment management and governance to ensure scarce resources translate into growth and social outcomes. - Address risks from weakly designed public–private partnerships and inadequate state-owned enterprise governance in a timely manner. *Preface, Fiscal Monitor: Fiscal Policy Under Pressure: High Debt, Rising Risks (April 2026), International Monetary Fund.* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Global fiscal trends and risks - Global gross government debt rose to nearly 94 percent of GDP in 2025 and, on current trajectories, will reach 100 percent by 2029. - Global debt-at-risk three years ahead now stands near 117 percent of GDP, with a gap of roughly 20 percentage points between the median projection and the right tail. - The global fiscal gap—the difference between projected primary balances and the levels needed to stabilize the debt ratio—has contracted from a cushion of more than 1 percent of GDP a decade ago to near zero today. - Interest payments have risen sharply from 2 percent to nearly 3 percent of global GDP in four years as governments refinance at higher rates. - The global primary-deficit-to-GDP ratio is projected to narrow modestly by 2031 by about half a percentage point from its current level of 2.2 percent, an improvement insufficient to stabilize the debt ratio. - Over the forecast horizon through 2031, global debt is projected to rise by an additional 8 percentage points, reaching the 100 percent threshold in 2029. - Global output grew by 3.4 percent in 2025, while global headline inflation moderated to 4.1 percent (April 2026 World Economic Outlook). - The global fiscal deficit remained broadly unchanged at 5 percent of GDP in 2025, and gross public debt climbed to 93.9 percent of GDP, an increase of nearly 2 percentage points from 2024. - Since late February 2026, government bond yields across advanced economies have risen noticeably—by as much as 60 basis points in the case of the United Kingdom (UK 10-year gilt yield climbed from 4.23 percent on the eve of the war (February 27, 2026) to 4.83 percent on April 1, 2026). ### Fiscal impact of the war in the Middle East and other shocks - The war in the Middle East has added a material global source of fiscal pressure, disrupting energy supplies, tightening financial conditions, and forcing trade-offs between shielding populations from price spikes and preserving fiscal space. - The fiscal impact is highly asymmetric: - Energy-importing countries, particularly low-income developing countries, face the largest costs. - Potential beneficiaries are narrower than in past energy shocks because major Gulf exporters are themselves directly affected by the conflict. - Even under relatively benign scenarios, the conflict threatens fiscal positions through higher commodity prices, tighter financial conditions, lower activity, and rising defense outlays. - In a scenario of prolonged conflict, global debt-at-risk could increase by an additional 4 percentage points. - A correction in artificial intelligence–related asset valuations, in which US stocks fall by 20 percent with spillovers to global financial conditions, could raise global debt-at-risk by a further 2.4 percentage points. - Protectionist pressures and geoeconomic fragmentation risk reducing primary balances through industrial subsidies and trade-related support with uncertain productivity payoffs. - Domestic social unrest and pressures on central bank independence can widen primary deficits, lift inflation expectations, and increase risk premia. ### Country snapshots and drivers of global debt dynamics - United States: - Running a general government deficit of 7 percent to 8 percent of GDP despite operating near full capacity. - No debt consolidation plan in sight; gross debt is projected to reach 142 percent of GDP by 2031. - Stabilizing the US debt path will require action on both revenue and expenditure, including spending on major entitlement programs. - China: - Near-term fiscal expansion to support domestic demand amid deflationary pressures has widened the overall deficit to nearly 8 percent of GDP. - Persistent large deficits are expected to push debt toward 127 percent of GDP by 2031. - Stabilizing China’s debt will require significant consolidation over time, tax and social security reforms, and debt restructuring of local government financing vehicles. - Japan: - Higher inflation, GDP growth, and smaller primary deficits are improving debt dynamics; projected decline in Japan’s debt ratio by about 14 percentage points supported by strong nominal growth. - Sovereign yields have climbed to record highs, with potential spillover effects. - Europe: - Several EU members have activated escape clauses from the union’s rules regarding deficits to accommodate increasing defense spending, which will likely prove persistent and raise fiscal trade-offs. - Emerging and frontier markets: - Generally enjoyed favorable market access in 2025, helped by a weaker dollar, but debt levels remain elevated. - Issuance volumes halved and maturities shortened sharply for lower-rated borrowers. - Low-income countries: - Interest payments have reached historic highs relative to revenue. - Declining amounts of aid are creating financing gaps that some countries cannot cover. - Overall: The projected increase in global debt largely reflects increases in China and the United States; declining debt ratios in selected countries provide only modest offsets. ### Market structure, transmission, and vulnerabilities - The marginal buyers of government bonds have shifted toward private (often leveraged) investors as central banks unwind balance sheets; hedge funds now play a larger role in intermediation. - Some major emerging markets are increasingly relying on local currency issuance absorbed by domestic investors. - The increase in US Treasury supply is compressing the safety premium traditionally commanded by US Treasuries, pushing up borrowing costs globally. - Supply-driven increases in US yields spill over almost one for one to foreign bond markets, disproportionately affecting countries reliant on external financing. - Several systemic economies have shortened the maturity profiles of their debt to manage near-term interest bills, increasing exposure to short-term funding shocks. - Term spreads (2- and 10-year government bond yields) have stayed elevated, reflecting higher term risk premiums and systemic risks. ### Scenarios and quantified downside risks - Prolonged conflict in the Middle East: global debt-at-risk could increase by an additional 4 percentage points. - AI-related asset valuation correction (US stocks fall by 20 percent): global debt-at-risk could rise by 2.4 percentage points. - The right-tail distribution of outcomes implies a roughly 20 percentage point difference between median projections and adverse outcomes three years ahead. ### Policy recommendations and priorities - Advanced economies with large debt loads need concrete, well-sequenced consolidation measures, not aspirational medium-term targets. - For the United States: action on both revenue and expenditure, including on major entitlement programs. - For European governments: reconcile defense commitments with aging-related pressures through tangible reallocation of spending priorities. - Emerging markets: - Address contingent liabilities. - Phase out fiscally draining fuel subsidies. - Broaden tax bases as core elements of credible medium-term fiscal plans. - China: - Continue near-term fiscal expansion focused on boosting consumption and supporting the property sector until reflation is durable. - Undertake medium-term consolidation, tax and social security reforms, and restructuring of local government financing vehicles. - Low-income countries: - With declining external aid, domestic revenue mobilization is essential; well-executed tax administration reforms can deliver meaningful gains. - Across all country groups: - Policy responses to higher energy costs should be tightly calibrated, targeted to vulnerable households and viable firms, and consistent with monetary policy efforts to contain inflation. - Avoid broad-based price subsidies that carry large fiscal costs, are difficult to unwind, or suppress domestic price signals in ways that spill over to global commodity markets. - Domestic fuel and gas prices should reflect international price movements and support demand adjustment, even when temporary targeted support is in place. - Safeguard central bank independence and the integrity of fiscal frameworks. - Communicate fiscal realities clearly and enhance transparency to anchor expectations and build support for needed adjustment. - Make fiscal policy more forward-looking and structurally anchored while managing the effects of the energy price shock. *Source: EXECUTIVE SUMMARY (text - EXECUTIVE SUMMARY), Fiscal Monitor: Fiscal Policy Under Pressure: High Debt, Rising Risks, April 2026.* ### CHAPTER 1 FISCAL POLICY UNDER PRESSURE: HIGH DEBT, RISING RISKS ### CHAPTER 1 FISCAL POLICY UNDER PRESSURE: HIGH DEBT, RISING RISKS ### Fiscal Balances: Recent Outcomes and Projections - World overall balance (Percent of GDP): 2019 –3.5 2020 –9.5 2021 –6.3 2022 –3.7 2023 –5.0 2024 –5.1 2025 –5.0 2026 –5.2 2027 –5.1 2028 –5.1 2029 –4.9 2030 –4.9 2031 –4.8 - Advanced Economies overall balance (Percent of GDP): 2019 –3.0 2020 –10.2 2021 –7.3 2022 –2.9 2023 –4.9 2024 –4.9 2025 –4.4 2026 –4.8 2027 –4.7 2028 –4.7 2029 –4.6 2030 –4.6 2031 –4.5 - Advanced Economies excl. US overall balance (Percent of GDP): 2019 –1.0 2020 –7.5 2021 –4.4 2022 –2.3 2023 –2.5 2024 –2.5 2025 –2.4 2026 –2.6 2027 –2.5 2028 –2.4 2029 –2.3 2030 –2.3 2031 –2.3 - Selected country overall balances (Percent of GDP): - Canada: 2019 0.0 2020 –10.9 2021 –3.1 2022 0.6 2023 –0.2 2024 –2.1 2025 –1.8 2026 –2.7 2027 –2.5 2028 –2.2 2029 –2.0 2030 –1.7 2031 –1.5 - Euro Area: 2019 –0.5 2020 –7.0 2021 –5.1 2022 –3.4 2023 –3.5 2024 –3.1 2025 –3.0 2026 –3.3 2027 –3.4 2028 –3.2 2029 –3.1 2030 –3.0 2031 –3.0 - United States: 2019 –5.8 2020 –14.1 2021 –11.5 2022 –3.7 2023 –7.9 2024 –7.9 2025 –6.8 2026 –7.5 2027 –7.4 2028 –7.6 2029 –7.5 2030 –7.5 2031 –7.4 - Japan: 2019 –3.0 2020 –9.0 2021 –6.3 2022 –4.2 2023 –2.4 2024 –1.7 2025 –1.1 2026 –2.0 2027 –2.4 2028 –2.9 2029 –3.3 2030 –3.7 2031 –4.0 - World output (Real, percent): 2019 3.0 2020 –2.7 2021 6.7 2022 3.8 2023 3.3 2024 3.4 2025 3.4 2026 3.1 2027 3.2 2028 3.2 2029 3.2 2030 3.1 2031 3.1 ### Public Debt: Levels and Trajectories - Global gross debt (Percent of GDP): 2019 82.2 2020 97.4 2021 92.8 2022 89.2 2023 90.8 2024 92.0 2025 93.9 2026 95.3 2027 97.2 2028 98.8 2029 100.0 2030 101.2 2031 102.3 - Advanced Economies gross debt (Percent of GDP): 2019 100.9 2020 119.3 2021 112.9 2022 107.9 2023 107.0 2024 107.6 2025 108.0 2026 108.2 2027 109.4 2028 110.9 2029 112.2 2030 113.5 2031 114.8 - Selected country gross debt (Percent of GDP): - United States: 2019 108.8 2020 132.6 2021 125.0 2022 119.1 2023 120.0 2024 122.3 2025 123.9 2026 125.8 2027 128.6 2028 132.1 2029 135.5 2030 138.9 2031 142.1 - Japan: 2019 206.3 2020 228.8 2021 222.7 2022 227.8 2023 220.3 2024 214.5 2025 206.5 2026 204.4 2027 200.1 2028 197.7 2029 195.7 2030 193.9 2031 192.8 - China: 2019 59.8 2020 70.1 2021 72.1 2022 77.3 2023 84.1 2024 90.4 2025 99.2 2026 106.9 2027 112.5 2028 116.7 2029 120.3 2030 123.8 2031 126.8 - Global net debt (Percent of GDP): 2019 66.8 2020 78.1 2021 75.5 2022 72.2 2023 72.4 2024 72.8 2025 73.5 2026 74.1 2027 75.4 2028 76.8 2029 79.2 2030 79.4 2031 80.6 - Advanced Economies net debt (Percent of GDP): 2019 73.2 2020 84.9 2021 82.0 2022 79.0 2023 79.3 2024 79.3 2025 79.7 2026 80.1 2027 81.5 2028 83.1 2029 84.7 2030 86.3 2031 87.8 ### Drivers of the Increase in Global Government Debt (2025–31) - Decomposition (percent of global GDP) annual-average contributions: - Stock-flow adjustment (annual average): +1.4 - Primary deficit (annual average): +1.9 - Snowball: r (annual average): +3.1 - Snowball: g (real) (annual average): −2.4 - Snowball: π (price) (annual average): −2.6 ### Risks, Market Structure, and Debt Composition - Shift in holders of government debt toward private investors as central bank balance sheets unwind increases exposure to market conditions. - Increased reliance on short-term issuance in some economies (notably the United States) compresses refinancing cycles and raises sensitivity to market and monetary policy shocks. - Empirical estimate: a monetary policy shock of one standard deviation yields a response of 4.07 percentage points of GDP on the debt-to-GDP ratio 20 quarters after the shock in a high–short-term-debt scenario (Figure 1.7). - Financial market volatility increased since late February due to the conflict in the Middle East, pushing global bond yields higher and weakening emerging market assets and currencies amid a strengthening dollar. ### The Global Fiscal Gap and Cross-Country Divergence - Global fiscal gap (distance between actual global primary balance and debt-stabilizing global primary balance): - 2014–19 average: 1.2 percent of GDP - 2024–29 estimate: 0.1 percent of GDP - Distributional contrasts between medians and weighted global averages: - Overall balance: median deterioration from 2.4 percent to 2.8 percent of GDP (2014–19 versus 2024–29), while the weighted global average deterioration widened from 3.1 percent to 5.1 percent of GDP. - Government debt: median economy shows a manageable increase; weighted global average debt ratio rises from 79.8 percent to 96.2 percent of GDP. - Country case highlights (drivers of fiscal gap change, 2014–19 versus 2024–29): - Germany: fiscal gap shifts from 3.6 percent to −1.5 percent of GDP, driven almost entirely by an increase in primary spending (following a reform of Germany’s debt brake to finance public investment and other national priorities). - Japan: fiscal gap projected to rise to 4.0 percent of GDP from about zero a decade ago, reflecting stronger government revenues and markedly higher inflation relative to the previous decade (improving the primary balance contribution). ### Observations on Data and Methodology - Estimates and projections are based on statistical information available through April 1, 2026. - Projections are based on IMF staff assessments of current policies. - Country-specific details and methodological notes (including coverage differences for China and revisions for Japan’s debt definition) are noted in source tables and explanatory notes. *Source: IMF staff estimates and projections (Fiscal Monitor: Fiscal Policy Under Pressure: High Debt, Rising Risks, April 2026).* ### 1. Germany2. Japan ### 1. Germany2. Japan ### Change in the Global Fiscal Gap (2014–19 versus 2024–29) - Fiscal gap defined as the primary balance minus the debt-stabilizing primary balance (positive gap = primary balance above level needed to stabilize debt, excluding stock-flow adjustments). - Positive bars in the figure indicate factors that increase the fiscal gap (increasing debt sustainability); negative bars indicate factors that reduce it. - “Snowball” effects decompose contributions from changes in effective interest rates, real GDP growth, and the GDP deflator to the debt-stabilizing primary balance. - Data labels use ISO country codes. ### Recent fiscal context and key assumptions - Baseline outlook accounts for the war in the Middle East but assumes a relatively short-lived conflict; projections assume the conflict is limited in duration and scope, with related disruptions fading by mid-2026 and production and exports in the region normalizing thereafter. - Three key influences on the outlook: (1) higher commodity prices; (2) second-round effects from rising inflation expectations; and (3) tighter financial conditions, reflected in rising bond yields. - A scenario in “Risks to the Fiscal Outlook” examines a more prolonged and severe conflict and its implications for the global debt-to-GDP ratio. ### A. The Two Largest Economies: United States and China - United States - General government deficit closed 2025 at 6.8 percent of GDP, an improvement from 7.9 percent in 2024. - Interest expenditures rose to 4.3 percent of GDP in 2025—0.3 percentage point higher than in the previous year and 1.5 percentage points above the 2019 level. - Primary spending remained broadly unchanged as a share of GDP. - Tariff receipts reached $264 billion (0.9 percent of GDP) in 2025, an increase of 230 percent relative to the previous year. - The US government shutdown lasted 43 days in 2025 with little effect on aggregate annual fiscal outcomes. - The One Big Beautiful Bill Act (July 2025): - Includes a one-time accounting credit of about $131 billion (0.4 percent of GDP) resulting from mandated cuts to student loan subsidies and elimination of the Grad PLUS program. - Makes most 2017 tax cuts permanent and introduces new deductions (tips, overtime pay, interest on automobile loans), reducing structural revenues; offsets include reductions in entitlement spending, student loan subsidies, and green energy tax credits. - US Congressional Budget Office estimates indicate the act will add above half a percent of GDP to the US primary deficit each year over the long term. - Medium-term projections: - General government deficits remain in the range of 7 percent–8 percent of GDP. - Interest payments approaching 5 percent of GDP by 2031. - Gross debt projected to rise from 123.9 percent of GDP in 2025 to about 142 percent by 2031. - Shifts in holders and instruments of US public debt: - Federal Reserve and foreign investors absorbed about $11 trillion of the increase in US government debt over the past decade and a half. - Private domestic investors (mutual funds, hedge funds, other nonbank financial intermediaries) absorbed almost $5 trillion in US public debt since 2022. - Issuance of short-term Treasury bills surged since 2020 and especially since 2023; Treasury bills have added nearly $5 trillion to outstanding federal debt since the COVID-19 pandemic, shortening average maturity and raising rollover frequency and gross financing needs. - China - Overall deficit widened to 7.9 percent of GDP in 2025; official headline deficit reached 4 percent of GDP. - Expansion in 2025 amounted to slightly less than 1 percent of GDP and reflected several modest initiatives supporting consumption plus structural shortfalls in nontax and property revenues (individual measures < 0.1 percent of GDP). - Continued rollout of the multiyear local government debt swap program amounting to RMB 10 trillion (about 7 percent of GDP), enabling exchanges of high-interest “hidden” debt for official local government bonds at lower interest rates. - Vertical transfers from the central government and debt swaps provided temporary relief, but underlying vertical fiscal imbalance remains substantial as revenues from land sales weaken. - Medium-term outlook: - General government debt projected to increase from 99.2 percent of GDP in 2025 to almost 127 percent by 2031. - Persistent large primary deficits forecast to remain in the range of 6 percent–7 percent of GDP even in the absence of a sizable negative output gap. - Favorable interest-growth differentials insufficient to offset the scale of primary deficits. ### B. Advanced Economies (excluding the United States): aggregate and country-level shifts - Aggregate outcomes and projections - Headline deficit for advanced economies excluding the United States in 2025: 2.4 percent of GDP. - Debt-to-GDP ratio for these economies in 2025: 95.3 percent (effectively unchanged from 2019). - Medium-term projections: group deficit to narrow modestly; increase of roughly half a percentage point in interest-to-GDP ratios offsets a gradual move toward a balanced primary position; gross public debt projected to stabilize at about 94 percent of GDP. - Country-level dynamics - United Kingdom: reduced deficit to 5.4 percent of GDP in 2025, driven by tax increases, tax threshold freezes, and expiration of temporary energy support measures. - Canada and Japan: gains reflecting spending restraint. - Spain and Japan: projected to see debt ratios fall by 10 to 14 percentage points by 2031 due to favorable interest-growth dynamics. - Belgium and Korea: projected significant increases in debt ratios by 2031—Belgium to exceed 122 percent of GDP and Korea to reach 63 percent of GDP. - Germany: projected debt to rise to nearly 74 percent of GDP to accommodate investment and defense priorities. ### Japan: drivers of projected debt decline and risks - Key mechanics - Debt reduction in the reference scenario driven by interest costs remaining below nominal GDP growth. - Recent increase in Japan’s inflation rate lifted nominal GDP, while effective interest rate on outstanding government debt adjusted only gradually due to long average maturity of public debt. - Given large legacy debt, small favorable differentials between growth and interest rates generate large mechanical debt-ratio declines within the projection horizon. - Risks and developments - Japanese bond yields rose to decade-high levels: 10-year yield reached 2 percent and 30-year yield reached 3.4 percent in December 2025—and remained above those levels thereafter. - Decomposition of yields suggests that risk compensation and expectations of a higher policy-rate path have driven recent increases in borrowing costs. - Debt-reducing effect diminishes over time as older low-cost debt matures and is rolled over at higher prevailing rates. - Japan’s open capital account, large government debt market, and sizable net international investment position mean developments in the Japanese government bond market can spill over to sovereign borrowing costs abroad. *Italic: Source — IMF, World Economic Outlook database; and IMF staff calculations, Chapter 1, Fiscal Monitor: Fiscal Policy Under Pressure: High Debt, Rising Risks (April 2026).* ### 0.5 percentage point of GDP relative to those in the ### text - 0.5 percentage point of GDP relative to those in the ### Europe: Defense-driven Fiscal Loosening and Persistence - Fiscal loosening in Europe increased by 0.5 percentage point of GDP relative to those in the April 2025 Fiscal Monitor (Figure 1.17, panel 1). - Defense spending is one of the most rigid components of public expenditure (Figure 1.17, panel 2), indicating the recent surge in military outlays among European countries signals a structural, rather than a temporary, commitment. - Investments in the military can support activity, particularly in economies characterized by efficiency in public investment and low borrowing costs (Ben Zeev, Pappa, and Scola Gagliardi 2025; Sarasa Flores, Serrador, and Arriza 2025; Furceri and others 2026), but risk: - exerting upward pressure on debt and prices, - potentially affecting monetary policy, - unless offset by credible spending reprioritization or revenue measures. - The fiscal risk from sustained debt-financed defense spending is most acute for countries with high levels of debt and limited fiscal space, increasing vulnerability to adverse shocks and the risk of fiscal distress (Acalin and others 2025). - This risk interacts with sizable longer-term spending pressures from aging (pensions and health care) and from investment for adaptation to climate change (Eble and others 2025). ### Emerging Markets (Excluding China): Fiscal Outcomes and Debt Dynamics - 2025 headline outcomes: - Fiscal deficit widened by about half a percentage point of GDP to 4.7 percent of GDP. - Interest payments reached 3.8 percent of GDP, with a particularly sharp increase in Brazil. - Widening driven roughly equally by rising interest payments and a deterioration in the primary balance. - Country-specific developments: - Russia and Saudi Arabia experienced notable fiscal weakening due to a marked expansion in primary spending and declining government revenues, respectively. - India, Mexico, and Türkiye recorded improvements supported by restraint in primary spending. - Türkiye also recorded robust revenue growth in 2025. - Aggregate debt: - The aggregate debt-to-GDP ratio for the group climbed slightly to 57.5 percent. - Several major economies carried elevated ratios: exceeding 84 percent in India and 93 percent in Brazil. - Market access and spreads: - Before the surge in market volatility since February 2026, investment-grade sovereign spreads fell to record lows while frontier market spreads stayed elevated. - Issuance of sovereign bonds reached an all-time high in 2025. - Since mid-February 2026, spreads widened materially, particularly for lower-rated issuers (a 50 basis point increase for B-rated economies, as depicted by composite indices). - Tightening financial conditions and a strengthening US dollar threaten earlier favorable market access. - Issuance characteristics and risks: - Record 2025 issuance masks divergence across credit segments: investment-grade issuers benefited, while lower-rated issuers did not. - For economies with sovereign bonds rated B, total issuance fell to nearly one-third of its 2017 level. - Average maturities shortened from 16 years to just 8 years for lower-rated issuers. - Shorter maturities and elevated borrowing costs heighten refinancing pressures and exposure for lower-rated sovereigns. - Widening bond spreads for low-rated frontier economies since the escalation of tensions in the Middle East will further exacerbate this divergence. - Medium-term projections: - Overall deficit in emerging markets is projected to gradually narrow to about 3.5 percent of GDP by 2031, driven by a transition toward primary surpluses and spending restraint. - Gross debt for the group is forecast to breach 60 percent of GDP in 2028, reflecting positive stock-flow adjustment, including valuation effects and debt-creating financial operations. - Cross-country divergence: debt ratios projected to decline or stabilize in Argentina and India (supported by strong nominal growth and fiscal consolidation), while Brazil, Poland, Romania, Russia, and Saudi Arabia are set to carry sizable fiscal deficits well into the medium term. - Production disruptions and infrastructure destruction in the Middle East expected to impose significant costs on Gulf economies via substantial forgone revenues from energy and energy-intensive exports, with persistence highly uncertain. ### Emerging Markets: Sovereign Bond Market Dynamics - Issuance and redemptions: - Issuance volumes in 2025 were sufficient to cover upcoming redemptions comfortably for most issuers in emerging markets prior to mid-February 2026 volatility. - Ratings and issuance metrics: - Rating categories: AA-A (high-grade to upper-medium-grade), BBB (investment-grade or lower-medium-grade), BB (high-yield or non-investment-grade), B (highly speculative or frontier), NR (nonrated). - Weighted average maturities shortened (example: 16 years to 8 years for lower-rated issuers). - For B-rated economies, issuance fell to nearly one-third of its 2017 level. - Market structure shifts: - Divergence between investment-grade and lower-rated segments intensified after February 2026. - Composite indices show a 50 basis point increase for B-rated economies since mid-February 2026. ### Low-Income Developing Countries (LIDCs): Aid Withdrawal and Fiscal Adjustments - 2025 headline outcomes: - Increased mobilization of revenue more than offset rising borrowing costs, keeping the headline deficit just below 3 percent of GDP. - Tax revenues increased to 11.3 percent of GDP (from 10.7 percent in 2024). - Interest payments reached a historic high of 2.3 percent of GDP, or nearly 15 percent of total revenue, a sharp increase of more than 5 percentage points relative to their 2015 level (Figure 1.20). - Favorable interest-growth differential contributed about 4 percentage points to debt reduction. - Aggregate debt-to-GDP ratio declined by about 2 percentage points in 2025, to 48.2 percent. - Official development assistance (ODA) declines: - Survey across 58 economies indicates aggregate ODA fell from 1.8 percent of GDP in 2024 to 1.5 percent in 2025 (Figure 1.21, panel 1). - Declines especially severe in sub-Saharan Africa: Burundi, Central African Republic, Lesotho, and Somalia reported ODA losses exceeding 4 percent of GDP. - Some Pacific island economies (Kiribati, Tonga, and Tuvalu) recorded increases in ODA. - Survey results for a subset of countries indicate nearly half of the decline in ODA is expected to translate directly into a financing shortfall. - Medium-term outlook: - Deficits expected to remain near 3 percent of GDP. - Aggregate aid flows for the group expected to decline in coming years, making external financing gaps increasingly structural. - Favorable interest-growth snowball effect projected to moderate toward the end of the decade but remain sufficiently positive to support gradual reduction in aggregate public-debt ratio among LIDCs to 44 percent of GDP by 2031. - Additional pressures and shifts: - Tightening immigration policies likely to reduce remittances. - Equity inflows from foreign direct investment remain below pre-COVID-19 levels. - External debt flows have recently weakened. - Increased frequency of weather shocks (floods, cyclones, droughts) with fiscal costs in some cases exceeding 3 percent of GDP. - Shift toward domestic debt markets reduces foreign exchange risk but raises borrowing costs, deepens sovereign-bank linkages, and can crowd out private credit. - The war in the Middle East compounds pressures via higher food, energy, and fertilizer import costs and tighter financing conditions, risking wider fiscal deficits, higher inflation, and deeper debt vulnerabilities in the least-capable countries. ### Risks to the Fiscal Outlook and War Scenario - Global debt-at-risk: - Projected global debt-at-risk three years ahead (95th percentile for 2028) stands at 117.2 percent of GDP, up from 116.6 percent reported in the April 2025 Fiscal Monitor (Figure 1.23, panel 1). - The 0.6 percentage point increase is driven almost entirely by higher debt levels for 2028 compared with 2027 projected in the April 2026 World Economic Outlook (Figure 1.23, panel 2). - Upside debt risks—the gap between the 95th percentile and the baseline World Economic Outlook projection (98.8 percent of GDP)—have stabilized but remain elevated at about 20 percentage points of GDP. - Drivers of higher debt-at-risk: - The increase reflects contributions from higher initial debt, primary deficit, financial conditions, uncertainty and risks, growth, inflation, and macroeconomic factors (Figure 1.23, panel 2). - Major new source of fiscal risk: outbreak of armed conflict in the Middle East - Disrupted approximately 20 percent of global oil supplies transiting the Strait of Hormuz, destroyed critical infrastructure, and triggered a sharp increase in energy prices. - Further intensification of the conflict and broader geopolitical tensions would pose additional downside fiscal risks, highly asymmetric across country groups depending on energy and food balances, reliance on fuel subsidies, and exposure to external financing conditions. - Three additional layers of downside risk: 1. Policy shifts driven by national security (trade barriers, industrial subsidies, resource reallocation) impose fiscal costs with uncertain productivity returns and constrain policy flexibility, intensifying pressures on central banks to accommodate fiscal needs. 2. Structural shifts in sovereign debt markets (growing role of leveraged nonbank financial intermediaries and erosion of the US Treasury’s traditional convenience yield) increase vulnerability to sudden repricing even as headline volatility falls. 3. Slow-moving structural pressures: aging-related costs where reforms lag; contingent liabilities from SOEs that are politically difficult to restructure; and declining development assistance for LIDCs as donors adjust priorities. - Prolonged war impacts on public finances: - Expenditure pressures would rise sharply, especially where fuel subsidy regimes exist—subsidy bills reached 2 percent–4 percent of GDP in some countries during the 2022 commodity price surge. - Governments may intervene through subsidies, tax adjustments, administered pricing, and absorption of losses by SOEs, shifting global price shock costs onto public finances. - Higher fertilizer prices could raise food-related public spending in some emerging markets and LIDCs. - Upside scenario: - If productivity gains from artificial intelligence (AI) materialize sooner than expected and real interest rates do not react much, stronger potential growth could improve debt dynamics. - The 5th percentile of the debt-at-risk distribution is 85 percent of GDP, roughly 14 percentage points below the median, indicating scope for positive surprises. *Italic: Source — IMF, Fiscal Monitor: Fiscal Policy Under Pressure: High Debt, Rising Risks (April 2026), text.pdf* ### 1. Global Public Debt-at-Risk ### 1. Global Public Debt-at-Risk ### Key drivers and scenario impacts - Severe Middle East conflict scenario (April 2026 WEO): global GDP level lower by 2.3 percent in 2027 and global inflation higher by 2.6 percentage points by 2027. - Under that severe scenario, the 95th percentile of the global three-year-ahead debt distribution increases by 4.0 percentage points of GDP relative to the reference forecast. - Distribution of the impact by country group (change in three-year-ahead upside debt risks in percent of GDP): - World: 4.0 - Advanced economies (AEs): 2.8 - Emerging market and developing economies (EMDEs): 6.2 ### Energy shocks and sovereign spreads - A one standard deviation oil supply shock (normalized to a rise in actual West Texas Intermediate oil prices of about 10 percent) raises sovereign spreads for oil-importing emerging markets by roughly 40–50 basis points over several quarters. - Spreads for oil-exporting emerging markets do not show a statistically significant change in response. - Net energy exporters outside the conflict zone (examples in text: Canada, Norway, Russia) would likely experience fiscal windfalls; Gulf Cooperation Council exporters likely face negative net fiscal impact due to production shut-ins and constrained export capacity. ### Stagflationary dynamics and monetary-policy interaction - Supply-driven inflation mechanically lowers debt-to-GDP ratios but limits tax revenue gains by compressing real household incomes and corporate profits. - Tighter monetary policy raises sovereign borrowing costs, particularly for economies with significant short-term or floating-rate debt. - For oil-importing countries, higher interest rates and slower growth are likely to outweigh the debt-reducing effects of inflation. ### Geoeconomic fragmentation, trade policy, and political instability - Trade policy uncertainty: number of protectionist measures is 50 percent higher than before the COVID-19 pandemic. - Historical estimates cited: US tariff increases in 2018–19 reduced the level of real GDP by approximately 2 percent over two years (Boer and Rieth 2024). - A one standard deviation shock to the Geopolitical Fragmentation Index is associated with an increase in public debt ratios of about 1.5 percentage points of GDP in the medium term. - Emerging markets are hit harder than advanced economies by year 5—about 5 percentage points of GDP more—because of larger output losses and widening sovereign spreads. - Domestic political instability: a one standard deviation increase in social unrest in a country is associated with: - Lower real GDP growth for the average economy by about 0.5 percentage point. - A higher primary deficit by 0.2 percentage point. ### Market-structure shifts and rollover risk - Ownership shift toward nonbank financial intermediaries (hedge funds) has increased fragilities in sovereign bond intermediation; primary dealers’ balance sheet capacity has declined relative to issuance. - Hedge fund–provided liquidity (cash-futures basis trades) is backed by more-leveraged investors and can be prone to flight, amplifying price dislocations if volatility or financing costs spike. - Convenience yield of US Treasuries has eroded: - Studies find the convenience yield on three-month Treasuries turned negative starting in 2024, and a persistent downward trend in the 10-year convenience yield over the past decade (Du, Keerati, and Schreger 2025; Jiang, Richmond, and Zhang 2025). - As the safety premium of US Treasuries decreases, the global risk-free benchmark effectively increases, raising financing costs worldwide. - Short-term issuance shift raises rollover exposure and fiscal vulnerability because rising short-term rates pass through quickly to debt-servicing costs. ### Quantified spillovers and model simulations - International spillovers from US Treasury supply shocks: - A 1 basis point increase in US yields after an expansionary Treasury debt supply shock raises foreign 10-year yields by 0.8–0.9 basis point. - The same shock depresses foreign industrial production by about 0.4 percent after one year. - Countries at the 75th percentile of foreign-investor exposure experience a 10-year yield response about 0.15 basis point stronger than those at the 25th percentile, and industrial production falls about 0.2 percent more after one year. - Simulation of a 2 percentage point increase in the short-term rate (New Keynesian model with short- and long-term bonds): - The figure displays simulated changes in the debt-to-GDP ratio one year after the shock. Representative values shown in the figure include: 1.1, 1.4, 2.0, 2.7, 2.4, 2.7, 4.1, 5.4 (percentage points) across scenarios of low vs high debt and short- vs long-maturity portfolios. - Amplification of debt accumulation is particularly pronounced at high debt levels and when rollover risk elevates short-term premiums. ### Risks and scenarios related to Artificial Intelligence (AI) - If AI productivity gains materialize faster or more broadly than baseline projections, potential growth could improve debt dynamics; however: - Debt-financed investment and equity concentration raise the risk of a disorderly correction in financial markets. - April 2026 WEO adverse scenario: US equities fall by 20 percent (about half the size of the correction following the dot-com bubble), with spillovers tightening global financial conditions. - In that scenario, upside global debt risks rise by 2.4 percentage points of GDP. - World: 2.4 - Advanced economies: 0.6 - EMDEs: 3.5 ### Implications for policy and market surveillance (analysis-driven points) - Energy shocks, geopolitical fragmentation, trade policy shifts, and political instability materially increase upside debt risks—especially for EMDEs. - Monitoring investor base composition, maturity profile of sovereign debt, and convenience-yield dynamics is critical to assessing rollover and spillover vulnerabilities. - Scenario analysis incorporating geopolitical and technology-driven shocks is necessary to capture asymmetric fiscal impacts across country groups and to inform preemptive fiscal and macrofinancial policy responses. *Source: IMF staff calculations and text excerpt from "1. Global Public Debt-at-Risk" (Fiscal Monitor chapter, April 2026).* ### 1. Response Differential of 10-Year Yield to Shock Arising from ### text - 1. Response Differential of 10-Year Yield to Shock Arising from ### Response of Yields and Activity to Treasury Auction Shocks - Figure content: Response differentials shown between the 75th and 25th percentiles of foreign holdings for: - 10-Year yield response per 1 basis point US day-0 (horizon in days after shock). - Industrial production response (percent cumulative log change) per 1 basis point US day-0 (horizon in months after shock). - Chart axes annotated with horizons: days 1–100 and months 2–24 (visual figure elements). ### Sovereign Spreads and Global Conditions - IMF staff analysis finds sovereign spreads in emerging markets are highly sensitive to global conditions. - Declines in the S&P 500 and tightening US financial conditions (Federal Reserve Bank of Chicago’s National Financial Conditions Index) are associated with a significant widening of spreads. - The response is asymmetric: tightening effects are roughly four times stronger than comparable easing (Online Annex 1.1). ### Structural Vulnerabilities and Fiscal Risks (Emerging Markets and Developing Economies) - Most prevalent fiscal risks identified in IMF staff reports (percent of countries): - Contingent liabilities from SOEs: 68 percent - Natural disasters: 52 percent - Banking sector vulnerabilities: 47 percent - Commodity price volatility: 37 percent - Political instability: 30 percent - Public-private partnership liabilities: 28 percent - Debt rollover risks: 27 percent - Potential impacts on debt (median and distributional notes): - Natural disasters: median estimated effect about 7 percent of GDP. - Liabilities of SOEs: median nearly 3 percent of GDP; effects are highly right-skewed (much larger effects for a subset of countries). - Note on data source: analysis based on 176 IMF staff reports published in 2025 using the Fiscal Monitor AI Analyst. ### Demographic Pressures (Advanced Economies) - Aging-related spending risks cited in 63 percent of IMF country reports for advanced economies. - By 2050: - Old-age dependency ratio in OECD member countries projected to increase to 52 per 100 workers (up from 33 in 2025). - Pension and health spending pushed upward by about 3 percent of GDP in 25 years (Koutsogeorgopoulou and Morgavi 2025; OECD 2025). - Population forecast revisions (UN World Population Prospects 2019 vs 2024) indicate a leftward shift in expected growth, particularly for advanced economies, implying higher dependency ratios and a shrinking revenue base. - Healthy aging may offset some spending, but longer lifespans can increase lifetime costs, especially when end-of-life care remains expensive. ### Decline in Official Development Assistance (ODA) and Fiscal Effects - Baseline projects declining ODA; risk of sharper withdrawal noted as donor priorities shift. - IMF staff estimates for a decline in ODA of 1 percent of the recipient’s GDP: - Reduces government revenues by 0.43 percent of GDP after four years. - Reduces government expenditures by 0.36 percent of GDP after four years. - Because revenue losses exceed expenditure cuts, primary balances deteriorate in the near term. - Adjustment falls disproportionately on public investment: −0.34 percent of GDP. - Health and social benefits also face reductions (Figure 1.37, panel 2), straining service delivery. - Empirical context: estimates from local projections for an unbalanced panel of 56 low-income developing countries, allowing asymmetric effects and using country and time fixed effects. ODA measure excludes humanitarian aid, technical cooperation, and food aid (Online Annex 1.5). ### Policy Conclusions and Recommendations - Global context: - High debt, rising interest costs, less accommodating markets, and debt-at-risk projections near 120 percent of GDP have narrowed fiscal room worldwide. - Geoeconomic and political tensions, plus structural vulnerabilities and shifts in sovereign bond markets, amplify exposure to investor sentiment changes. - General fiscal strategy: - Fiscal policy should be forward-looking with well-designed adjustment plans to preserve stability and reduce the risk of disruptive market pressures. - Allow domestic energy prices to adjust where feasible; avoid discretionary fiscal interventions that blunt price signals under supply constraints. - If support is necessary and fiscal space exists, it should be temporary, well-targeted, and narrowly focused—channeled through existing transfers to vulnerable households and, where warranted, short-term liquidity support to viable energy‑intensive firms—rather than broad-based measures that are fiscally costly, distortionary, and difficult to unwind. - Fiscal responses should be aligned with monetary policy to contain second-round inflation effects; overly expansionary fiscal measures risk forcing a tighter monetary stance. - Where fiscal space permits, allow automatic stabilizers to operate; where it does not, pursue budget-neutral reprioritization toward protecting the vulnerable rather than deficit-financed responses. - Commodity exporters experiencing windfalls should resist procyclical spending and channel gains into fiscal buffers or sovereign wealth funds. - Advanced economies: - Credible adjustment requires specific measures, clear sequencing, and medium-term frameworks resilient to political cycles. - Rationalize current spending (industrial subsidies, trade-related support measures, transfers, public wage bills) while preserving space for growth-enhancing public investment. - Safeguard legal and operational independence of central banks. - United States: both revenue and expenditure measures needed; broaden tax base, reduce tax expenditures, address long-term pressures from Social Security and Medicare. - Euro area: with potential growth slightly more than 1 percent annually, deepening the single market could boost growth and ease fiscal trade-offs. - Country-specific pointers: Canada (internal market integration), Belgium (shift priorities in current spending to sustain public investment), Italy (rationalize tax expenditures, improve tax compliance, link consolidation with growth-enhancing investments), United Kingdom (adhere to spending envelopes and strengthen value‑added/property tax efficiency), France/Finland/Portugal (pension and health reforms; curb automatic growth in health and pharmaceutical spending). - China: - Continue near-term fiscal expansion focused on boosting consumption and supporting the property sector until reflation is durable. - Over the medium term, ensure fiscal sustainability via significant fiscal consolidation, tax and social security reforms, and tackling local government debt overhang. - Gradually broaden the tax base through deeper tax reforms and scale back poorly targeted industrial policies to rebalance support toward households and raise productivity. - Emerging market economies: - Preserve institutional gains (independent central banks, inflation-targeting, strengthened fiscal frameworks, local-currency bond market development). - Adhere to structural balance targets; rely more on administrative and compliance measures to close revenue gaps and improve spending efficiency. - Reinforce medium-term fiscal anchors and legally enshrine fiscal rules where needed. - Country examples: Chile (improve spending efficiency), Brazil (strengthen fiscal frameworks with binding medium-term anchors), Argentina (legal enshrinement of fiscal rules), Angola (eliminate costly fuel subsidies), Pakistan and Sri Lanka (rationalize tax expenditures and broaden the tax base), South Africa (SOE reforms to limit guarantees and improve reporting), Barbados (reduce transfers and improve monitoring), The Bahamas and Grenada (strengthen disaster-risk financing and climate-resilient infrastructure), Belize (strengthen deposit insurance frameworks). - Low-income developing countries: - Shrinking aid flows have become a binding constraint, forcing cuts to essential services. - Consolidation of 1 percent of GDP estimated to reduce output by about 0.5 percent cumulatively after two years in sub-Saharan Africa (Abdel-Latif and others 2026). - Building domestic revenue mobilization capacity is the most sustainable path forward. ### Revenue Mobilization and Tax Administration Reforms - Tax gaps in low-income developing countries average about 5 percent of GDP. - Evidence on revenue yields from tax administration and related reforms: - Estimated gains range from 0.7 percent to 1.8 percent of GDP depending on scope and country circumstances (Figure 1.38). - Country cases: - Cabo Verde increased revenues by 2.9 percent of GDP over three years through digitalization and administrative reforms. - Mongolia achieved gains of 5.4 percent of GDP over five years through management of compliance risk and technology-enabled reforms. - Concrete reform steps: - Strengthen core administrative functions: taxpayer registration, filing, audit processes. - Leverage digitalization: e-invoicing, third-party data sharing. - Rationalize tax expenditures (which average nearly 20 percent of tax revenues in low-income developing countries). - Figure 1.38 numeric elements (as presented in the figure): - Sequence of numeric labels shown: 0.8 1.1 0.7 1.9 1.4 1.8 1.8 1.5 (associated with estimates of revenue yields from tax administration by study and country grouping). ### China: Saving, Social Safety Nets, and Rural-Urban Disparities - China household saving and social spending context: - China’s household saving rate averages about 20 percent of GDP. - This is roughly double the average among OECD countries. - Pension coverage is nearly universal: more than 1 billion people enrolled in public pension schemes. - Replacement rates: - Urban employees: income replacement rates exceeding 40 percent of GDP per capita. - Rural pensions: average just 2 to 3 percent of GDP per capita. - Regional disparities: Tier 1 cities have much higher social spending per capita than lower-tier cities and rural regions. - Empirical finding: A 1 percent increase in per capita social spending by prefectures is associated with a cumulative decline in rural saving rates of roughly 0.4 percentage point over two years. - Average per capita spending on health, education, and social security across prefectures in the sample is approximately 10 percent of GDP per capita. - Policy implication: stronger social protection can meaningfully reduce rural household saving and support rebalancing. *International Monetary Fund | April 2026 — Chapter 1, "FISCAL POLICY UNDER PRESSURE: HIGH DEBT, RISING RISKS"* ### Box 1.1. Fiscal Reforms to Reduce China’s High Household Saving Rate: ### Box 1.1. Fiscal Reforms to Reduce China’s High Household Saving Rate: The Role of Social Safety Nets ### Overview - Focus: relationship between government social spending (health, education, social security) and household saving behavior in China, with comparative references to OECD and EM averages. - Figure referenced: "Figure 1.1.1. China: Government Social Spending and Household Saving Rate" (panels: 1. Government Social Spending (Percent of GDP); 2. Reaction of Rural Saving Rate to Increase in Local Social Spending (Percentage points)). ### Measurement and data scope - Expenditure on health, education, and social security cited in the figure includes only spending that comes from the general government budget; it does not include spending from social security funds. - Panel 2 uses a two-stage, least-square, local-projection impulse response framework to estimate the cumulative change in rural savings following a shock to per capita social spending. - The shock size used in the analysis is a 1 percent increase in per capita social spending. - Instrument: a Bartik instrument constructed as (year 2000 old-age share times national growth of social spending). - Controls: lagged changes in the saving rate and prefecture and year fixed effects are controlled for. - Standard errors are two-way clustered. - Shaded areas in the impulse-response plots show one standard deviation and 90 percent confidence bands. - Abbreviations: EM = emerging market economy; OECD = Organisation for Economic Co-operation and Development. ### Key empirical findings - The analysis examines how rural household saving rates react to a 1 percent increase in per capita local social spending. - The identification strategy exploits variation induced by the Bartik instrument (year 2000 old-age share × national growth of social spending), with lagged saving-rate changes and prefecture and year fixed effects controlled. - Uncertainty presentation: results include two-way clustered standard errors; graphical bands display one standard deviation and 90 percent confidence bands. - Comparative context: figures label government social spending and household saving-rate relationships alongside OECD average and EM average benchmarks for social security, health, and education. ### Policy implications - The box frames social safety net spending (health, education, social security as financed from the general government budget) as a channel that can influence household saving behavior, particularly in rural areas. - The empirical approach suggests that targeted increases in local social spending (as measured per capita) can be evaluated for their potential to reduce rural household saving rates, using quasi-experimental identification (Bartik instrument) and robust inference (two-way clustered standard errors; presentation of one standard deviation and 90 percent confidence bands). *Source: Box 1.1. Fiscal Reforms to Reduce China’s High Household Saving Rate, Chapter 1, Fiscal Monitor: Fiscal Policy Under Pressure: High Debt, Rising Risks (April 2026).* ### References ### References ### Selected cited works - Abdel-Latif, Hany, Khalil Bechchani, Antonio C. David, and Thibault Lemaire. 2026. “The Fiscal Multipliers Narrative of Sub-Saharan Africa.” IMF Working Paper 2026/012, International Monetary Fund, Washington, DC. - Acalin, Julien, Victor Alonso-Albarran, Carlos Arroyo, W. Raphael Lam, Luciana Martinez, Anh Dinh Minh Nguyen, Frederic Roch, and others. 2025. “Fiscal Guardrails against High Debt and Looming Spending Pressures.” IMF Staff Discussion Note 25/004, International Monetary Fund, Washington, DC. - Acemoglu, Daron. 2025. “The Simple Macroeconomics of AI.” Economic Policy 40 (121): 13–58. - Adan, Hassan, Jean-Marc B. Atsebi, Nikolay Gueorguiev, Jiro Honda, and Manabu Nose. 2023. “Quantifying the Revenue Yields from Tax Administration Reforms.” IMF Working Paper 23/231, International Monetary Fund, Washington, DC. - Aghion, Philippe, and Simon Bunel. 2024. “AI and Growth: Where Do We Stand?” Policy Note, Federal Reserve Bank of San Francisco, San Francisco, CA. - Ahir, Hites, Nicholas Bloom, and Davide Furceri. 2022. “The World Uncertainty Index.” NBER Working Paper 29763, National Bureau of Economic Research, Cambridge, MA. - Ahir, Hites, Giovanni Dell’Ariccia, Davide Furceri, Chris Papageorgiou, and Hanbo Qi. 2023. “Financial Stress and Economic Activity: Evidence from a New Worldwide Index.” IMF Working Paper 2023/217, International Monetary Fund, Washington, DC. - Alpanda, Sami, and Serdar Kabaca. 2020. “International Spillovers of Large-Scale Asset Purchases.” Journal of the European Economic Association 18 (1): 342–91. - Arslanalp, Serkan, and Takahiro Tsuda. 2014. “Tracking Global Demand for Emerging Market Sovereign Debt.” IMF Working Paper 2014/039, International Monetary Fund, Washington, DC. - Atsebi, Jean-Marc B., Nikolay Gueorguiev, and Manabu Nose. 2025. “Enhancing Tax Capacity: Revenue Gains from Strengthening Tax Administration.” IMF Working Paper 25/219, International Monetary Fund, Washington, DC. - Baer, Katherine, Matthieu Bellon, Matt Davies, Ruud de Mooij, Vitor Gaspar, Andrea Lemgruber, Mario Mansour, and others. 2025. “Building Tax Capacity for Growth and Development: Evidence-Based Analysis for Mobilizing Domestic Revenue.” IMF Departmental Paper 25/007, International Monetary Fund, Washington, DC. - Bianchi, Francesco, Era Dabla-Norris, and Salma Khalid. 2025. “Perceptions of Public Debt and Policy Expectations: Evidence from Cross Country Surveys.” IMF Working Paper 25/197, International Monetary Fund, Washington, DC. - Bocola, Luigi, and Alessandro Dovis. 2019. “Self-Fulfilling Debt Crises: A Quantitative Analysis.” American Economic Review 109 (12): 4343–77. - Boer, Lukas, and Malte Rieth. 2024. “The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty.” IMF Working Paper 24/13, International Monetary Fund, Washington, DC. - Bonthuis, Boele, Yongquan Cao, and Christoph Freudenberg. 2026. “Population Aging and Pension Reforms in China.” IMF Working Paper 26/027, International Monetary Fund, Washington, DC. - Cerutti, Eugenio, Adolfo Garcia Pascual, Yosuke Kido, Longji Li, Giovanni Melina, Marina M. Tavares, and Philippe Wingender. 2025. “The Global Impact of AI: Mind the Gap.” IMF Working Paper 25/76, International Monetary Fund. Washington, DC. - Furceri, Davide, Carlos Goncalves, and Hongchi Li. 2025. “The Impact of Debt and Deficits on Long-Term Interest Rates in the US.” IMF Working Paper 25/142, International Monetary Fund, Washington, DC. - Furceri, Davide, Domenico Giannone, Faizaan Kisat, Waikei R Lam, and Hongchi Li. 2025. “Debt-at-Risk.” IMF Working Paper 2025/86, International Monetary Fund, Washington, DC. - Furceri, Davide, Pedro Juarros, Saurabh Mishra, Anh Dinh Minh Nguyen, Ana Sofia Pessoa, and Alexandre Sollaci. 2026. “Macroeconomic Impacts of EU Defense Spending.” IMF Working Paper 26/53, International Monetary Fund, Washington, DC. - International Monetary Fund (IMF). 2026. “People’s Republic of China: Staff Report for the 2025 Article IV Consultation.” IMF Country Report 26/44, Washington, DC. - Mian, Atif, Ludwig Straub, and Amir Sufi. 2025. “A Goldilocks Theory of Fiscal Deficits.” American Economic Review 115 (12): 4253–91. - Organisation for Economic Co-operation and Development (OECD). 2025. Pensions at a Glance 2025: OECD and G20 Indicators. Paris: OECD Publishing. - Xu, Yizhi, Fan Zhang, Rongyu Cui, and Ding Hua. 2025. “Reforms to Reduce China’s High Household Savings.” IMF Working Paper 2025/259, International Monetary Fund, Washington, DC. ### Glossary highlights (selected definitions) - Arrears: Total outstanding obligations due for payment that the government has failed to discharge. - Automatic stabilizers: Revenue and some expenditure items built in the budget that adjust automatically to cyclical changes in the economy. - Balance sheet: Statement of the values of the stock positions of assets owned and liabilities owed by a unit, or group of units, drawn up in respect of a particular point in time. - Contingent liabilities: Obligations that are not explicitly recorded on government balance sheets and that arise only in the event of a particular discrete situation, such as a crisis. - Convenience yield: The safety and liquidity premium embedded in the price of a sovereign bond; a declining convenience yield implies investors are demanding higher compensation. - Cyclically adjusted balance (CAB): Difference between the overall balance and the automatic stabilizers. - Debt-at-risk: Defined as the 95th percentile of the predicted quantile of the debt-to-GDP ratio over a given forecast horizon based on a set of financial, economics, and political variables. - Debt-stabilizing primary balance: Level of primary balance that would stabilize the ratio of debt to GDP in the previous year given the values of the nominal effective interest rate and growth rate in the contemporaneous year. - Fiscal buffer: Fiscal space created by saving budgetary resources and reducing public debt in good times. - Fiscal multiplier: Measures the short-term impact of discretionary fiscal policy on output. - Gross debt: All liabilities that require future payment of interest and/or principal by the debtor to the creditor; the term “public debt” is used in the Fiscal Monitor as synonymous with gross debt of the general government, unless specified otherwise. - Net debt: Gross debt minus financial assets corresponding to debt instruments. - Output gap: Deviation of actual from potential GDP, in percent of potential GDP. - Primary balance: Overall balance excluding net interest payments (interest expenditure minus interest revenue). - Snowball effect: The automatic change in the debt-to-GDP ratio arising from the difference between the effective interest rate on government debt and the nominal GDP growth rate. - Sovereign bond spreads: Difference in yields between the government bonds of different countries. - Structural primary balance: Extension of the cyclically adjusted primary balance that also corrects for other nonrecurrent effects that go beyond the cycle. - Term premium: Extra yield to compensate investors for the additional risks associated with holding longer-term securities. - Unidentified debt: The change in debt that is not explained by interest rate and growth differentials, primary balance, or movements of exchange rates. ### Methodological and statistical appendix — key data and conventions - Data sources and timing: - Country-specific data and projections for key fiscal variables are based on the April 2026 World Economic Outlook database, unless indicated otherwise. - Data in the statistical tables have been compiled on the basis of information available through April 1, 2026. - Country group counts and table coverage: - The Fiscal Monitor divides the world into three major groups: 43 advanced economies, 95 emerging market and middle-income economies, and 58 low-income developing countries. - Fiscal Monitor tables display 38 advanced economies, 40 emerging market and middle-income economies, and 39 low-income developing countries. - The Group of Seven (seven largest advanced economies by GDP) comprises Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. - Data treatment and definitions: - Composite data for country groups are weighted averages of individual-country data; weights are annual nominal GDP converted to US dollars at average market exchange rates as a share of the group GDP. - Most advanced economies and some large emerging markets follow GFSM 2014 or SNA/ESA-aligned national accounts; many other countries follow GFSM 2001, and some low-income developing countries use GFSM 1986. - The overall fiscal balance refers to net lending and borrowing by the general government; in some cases it refers to total revenue and grants minus total expenditure and net lending. - Fiscal data refer to calendar years except for specified economies (list includes Afghanistan, The Bahamas, Bangladesh, Barbados, Bhutan, Botswana, Dominica, Egypt, Eswatini, Ethiopia, Fiji, Haiti, Hong Kong SAR, India, Islamic Republic of Iran, Jamaica, Lesotho, Marshall Islands, Mauritius, Micronesia, Myanmar, Nauru, Nepal, Pakistan, Palau, Puerto Rico, Samoa, Singapore, St. Lucia, Thailand, Tonga, and Trinidad and Tobago), where data refer to the fiscal year. - For economies whose fiscal years end before June 30, data are recorded in the previous calendar year; for economies whose fiscal years end on or after June 30, data are recorded in the current calendar year. - Debt and fiscal data specifics: - Fiscal gross and net debt data are drawn from official data sources and IMF staff estimates; efforts are made to align with GFSM definitions though deviations can occur due to data limitations or country circumstances. - Cross-economy comparability adjustments: Australia (and other adopters of the 2008 SNA such as Canada, Hong Kong SAR, the United States) have gross and net debt levels adjusted to exclude the unfunded pension liabilities of government employees’ defined-benefit pension plans. - Country-specific notes (selected): - Bahrain: Fiscal balance estimates are based on total financing flows (including changes in central bank claims on the government); overall interest expense estimates include estimated charges on central bank claims on the government. Data are on a calendar year basis. - Bangladesh: Data are on a fiscal year basis. - Benin: Fiscal and debt data from 2021 through 2024 have been revised; revisions were prepared in collaboration with the authorities and confirmed pending official publication. - Brazil: General government data broadly follow GFSM (entry truncated in source). *Italic: Extracted from the References, Glossary, and Methodological and Statistical Appendix of the Fiscal Monitor: Fiscal Policy Under Pressure: High Debt, Rising Risks (April 2026).* ### 2014. Municipalities’ primary balances follow ### 2014. Municipalities’ primary balances follow ### Debt and balance definitions, coverage, and measurement issues - Municipalities’ primary balances follow below-the-line borrowing requirements. - Accrual data for non-interest revenues are not available. - Gross public debt includes the Treasury bills on the central bank’s balance sheet, including those not used under repurchase agreements. - Net public debt consolidates nonfinancial public sector and central bank debt. - The authorities’ definition of general government gross debt excludes government securities held by the central bank, except the stock of Treasury securities the central bank uses for monetary policy (those pledged as security for reverse repurchase agreement operations). - According to the authorities’ definition, gross debt amounted to 78.7 percent of GDP at the end of 2025. - Historical fiscal data and projections of key fiscal aggregates are in line with those of the April 2026 World Economic Outlook, unless noted otherwise. ### Country-specific measurement notes and adjustments (selected) - Canada: - For cross-economy comparability, gross and net debt levels reported by national statistical agencies for economies that have adopted the 2008 SNA (Australia, Canada, Hong Kong Special Administrative Region, the United States) are adjusted to exclude unfunded pension liabilities of government employees’ defined-benefit pension plans. - Canada’s net debt corresponds to net financial liabilities as reported by Statistics Canada and includes equity and investment fund shares, which Canada has built up substantially. - Statistics Canada has made a recent methodological change to value assets at market value instead of book value, which has decreased net debt. - Chile: - Cyclically adjusted balances refer to the structural balance, which includes adjustments for output and commodity price developments. - China: - Deficit and public debt numbers cover a narrower perimeter of the general government than IMF staff estimates in China Article IV reports. - Public debt data include central government debt as reported by the Ministry of Finance, explicit local government debt, and shares of contingent liabilities the government may incur, based on estimates from the National Audit Office. - IMF staff estimates exclude central government debt issued for China Railway. - Consolidated general government net borrowing (authorities’ definition) excludes transfers to and from stabilization funds but includes state-administered funds, state-owned enterprise funds, and social security contributions and expenses, as well as some off-budget spending by local governments. - Deficit numbers do not include some expenditure items, mostly infrastructure investment financed off budget through land sales and local government financing vehicles. - Fiscal balances are not consistent with reported debt because no time series of data in line with the National Audit Office debt definition is published officially. - Colombia: - Gross public debt refers to the combined public sector, including Ecopetrol and excluding Banco de la República’s outstanding external debt. - Dominican Republic: - Public debt, debt service, and cyclically adjusted or structural balances are for the consolidated public sector (central government, the rest of the nonfinancial public sector, and the central bank). The remaining fiscal series are for the central government. - Egypt, Ethiopia, Fiji, Hong Kong SAR, India, Iran (Islamic Republic), Haiti, Myanmar, Nepal, Pakistan, Singapore, Thailand: - Data are on a fiscal year basis (specific countries listed above). - Greece: - General government gross debt follows the GFSM 2014 definition and includes the stock of deferred interest. - Data since 2010 reflect adjustments in line with the primary balance definition under the enhanced surveillance framework for Greece. - Iceland: - Gross debt excludes insurance technical reserves (including pension liabilities) and other accounts payable. - Ireland: - For 2015, if the conversion of the government’s remaining preference shares to ordinary shares in one bank is excluded, then the fiscal balance is −1.1 percent of GDP. - Cyclically adjusted balances reported in Tables A3 and A4 exclude financial sector support measures. - Ireland’s 2015 national accounts were revised as a result of the restructuring and relocation of multinational companies, which resulted in a level shift of nominal and real GDP. - Japan: - The definition of general government gross debt has been revised from an unconsolidated market-value basis to a consolidated face-value basis. Consequently, the debt projections are not directly comparable with previous World Economic Outlook vintages. - Malawi: - Fiscal estimates and projections exclude central bank dividend receipts and recapitalization expenses. - Mexico: - Public sector refers to the central government, social security funds, public enterprises, development banks, the national insurance corporation, and the National Infrastructure Fund, but excludes subnational governments. - Debt numbers are adjusted to include the operations of the Special Purpose Vehicle (SPV) that issued pre-capitalized notes in 2025 (supporting Pemex) as well as Pemex’s Suppliers Investment Vehicle, in accordance with GFSM guidelines. - Other accounts payable, including those of state-owned enterprises, are not included. - Norway: - Cyclically adjusted balances correspond to the cyclically adjusted non-oil overall or primary balance and are a percentage of non-oil potential GDP. - Spain: - Overall and primary balances include financial sector support measures estimated to be 0.3 percent of GDP for 2013, 0.1 percent of GDP for 2014, 0.1 percent of GDP for 2015, and 0.2 percent of GDP for 2016. - Switzerland: - Data submissions at the cantonal and commune levels may be subject to sizable revisions. - Cyclically adjusted balances include adjustments for extraordinary operations related to the banking sector. - Türkiye: - Projections in the Fiscal Monitor are based on the IMF-defined fiscal balance, which excludes some revenue and expenditure items included in the authorities’ headline balance. - Turkmenistan: - IMF staff estimates and projections of the fiscal balance exclude receipts from domestic bond issuances as well as privatization operations, in line with GFSM 2014. The authorities’ official estimates include bond issuance and privatization proceeds as part of government revenues. - Uruguay: - Starting in October 2018, Uruguay’s public pension system has been receiving transfers recorded as revenues, consistent with the IMF’s methodology. - Coverage of fiscal data for Uruguay was changed from consolidated public sector to nonfinancial public sector with the October 2019 World Economic Outlook; historical data were revised accordingly. - Under the nonfinancial public sector perimeter (which excludes the central bank), assets and liabilities where the counterpart is the central bank are not netted out in debt figures; capitalization bonds issued by the government to the central bank are now part of the nonfinancial public sector debt. - Venezuela: - Fiscal accounts include the budgetary central government, social security funds, FOGADE, and a sample of public enterprises, including PDVSA. - Data for 2018–24 are IMF staff estimates. ### Fiscal policy assumptions, forecasting approach, and projection guidance - Short-term fiscal policy assumptions: - Based on officially announced budgets, adjusted for differences between national authorities and IMF staff regarding macroeconomic assumptions and projected fiscal outturns. - Medium-term fiscal projections: - Incorporate policy measures judged likely to be implemented. - When IMF staff has insufficient information to assess authorities’ budget intentions and prospects for policy implementation, an unchanged structural primary balance is assumed, unless indicated otherwise. - Country examples of projection bases and special assumptions (selected): - Afghanistan: - Data for 2021–24 are reported for selected indicators, with estimates for fiscal data. Estimates and projections for 2026–31 are omitted because of an unusually high degree of uncertainty given that the IMF has paused its engagement with the country. - Algeria: - Projections for 2026–31 are based on IMF staff estimates, 2024 budget outturns and the authorities’ 2025 budget law and medium-term budget plans. - Argentina: - Fiscal projections use available information regarding budget outturn, budget plans, and IMF-supported program targets for the federal government; on fiscal measures announced by the authorities; and on IMF staff ’s macroeconomic projections. - The interest bill excludes interest payments of zero-coupon bonds issued prior to December 2025, which are recorded below the line. - Australia: - Fiscal projections are based on ABS data, FY2025/26 Commonwealth budget and FY2024/25 state/territory budgets, and IMF staff estimates and projections. - Austria: - Projections use authorities’ latest medium-term plans, adjusted to reflect IMF staff macroeconomic assumptions, latest announcements on fiscal measures, and an assumption of moderate expenditure restraint over the medium term. - Bahrain: - Projections are based on approved state budget for FY2025 and FY2026 and incorporate new fiscal initiatives announced in December 2025. - Belgium: - Projections are based on the 2026 Budgetary Plan, Belgian Monitoring Committee reports, and other available information, adjusted for IMF staff assumptions. - Brazil: - Fiscal projections reflect current and expected policies. - Canada: - Projections use baseline forecasts from Budget 2025 and the latest provincial budget updates, with some IMF staff adjustments and incorporation of recent Statistics Canada releases. - China: - IMF staff fiscal projections incorporate the 2025 budget and estimates of off-budget financing. - Germany: - Projections assume a gradual increase in infrastructure and defense spending over the medium term in line with authorities’ intentions and that additional fiscal room generated by reforms to Germany’s fiscal rule (the “debt brake”) in March 2025 is mostly used. - Ghana: - Government debt and interest rate projections are based on a post-debt restructuring scenario. - India: - Projections are based on available information on authorities’ fiscal plans, with adjustments for IMF staff assumptions. - General government data cover only central and state governments; state government data are incorporated with a lag of up to two years. - Starting with FY2020/21 data, expenditure includes the off-budget component of food subsidies. - Ireland: - Fiscal projections are based on Budget 2026. - Israel: - Projections are for the general government and take into account the draft 2026 budget approved by the Knesset in the first reading on March 17, 2026. - Japan: - Projections reflect fiscal measures the government has already announced, adjusted for IMF staff assumptions. - Mexico: - The 2020 public sector borrowing requirements estimated by IMF staff adjust for some statistical discrepancies between above-the-line and below-the-line numbers. - Fiscal projections for 2026 are informed by estimates in Criterios 2026; projections for 2026 onward assume continued compliance with rules established in the Federal Budget and Fiscal Responsibility Law. - New Zealand: - Fiscal projections are based on the Half Year Economic and Fiscal Update 2025 and Budget Policy Statement 2026. - Numerous other country-specific bases and adjustments are applied as described by IMF staff on a case-by-case basis. ### Statistical notes and special treatments - IMF staff apply various adjustments for cross-economy comparability, treatment of off-budget items, inclusion/exclusion of specific instruments, and fiscal perimeter definitions depending on country-specific institutional and accounting practices. - Where data or projection coverage is limited or uncertain (for example, Afghanistan, Ecuador, Lebanon, Libya), IMF staff omit projections for certain periods or apply tailored judgment-based assumptions. *International Monetary Fund | April 2026* ### 2025. Fiscal projections are based on the 2026 ### text - 2025. Fiscal projections are based on the 2026 ### Fiscal-projection assumptions (country-specific notes) - 2025 projections in some cases: "Fiscal projections are based on the 2026 supplementary budget." - Nigeria: Projections based on staff’s assessment of the authorities’ recent reforms and the 2026–28 Medium-Term Expenditure Framework. - Norway: "The fiscal projections are based on the 2026 budget and subsequent ad hoc updates." - Philippines: "Revenue projections reflect the IMF staff ’s macroeconomic assumptions and incorporate the updated data. Expenditure projections are based on budgeted figures, institutional arrangements, and current data in each year, and IMF staff assumptions." - Poland: "Data are based on ESA95 2004 and prior. Data are based on ESA 2010 beginning in 2005 (accrual basis). Projections begin in 2026, based on the 2026 budgets and subsequently announced fiscal measures." - Portugal: "The projections for the current year are based on the authorities’ approved budget, adjusted to reflect the IMF staff ’s macroeconomic forecast. Projections thereafter are based on the assumption of unchanged policies. Projections for 2026 reflect information available in the 2026 budget proposal." - Romania: "Fiscal projections reflect legislated changes up to the end of 2025 and measures announced in 2026. Medium-term projections include assumptions about the gradual implementation of measures and disbursement in the framework of the European Union’s Recovery and Resilience Facility." - Russian Federation: - "The fiscal rule was suspended in March 2022 by the government in response to the sanctions imposed after the invasion of Ukraine, allowing for windfall oil and gas revenues above benchmark to be used to finance a larger deficit in 2022 as well as savings accumulated in the National Welfare Fund." - "The 2023–25 budget was based on a modified rule with a two-year transition period which set the benchmark oil and gas revenues fixed in rubles at Rub 8 trillion, compared with a fixed benchmark oil price at $40 a barrel under the 2019 fiscal rule." - "However, in late-September 2023, the Ministry of Finance proposed reverting to the earlier version of the fiscal rule from 2024 onward to determine the price of oil and gas revenues but set the benchmark oil price at $60 a barrel." - "The new rule, effective in the 2025 budget, allows for higher oil and gas revenues to be spent, but it simultaneously targets a smaller primary structural deficit." - Saudi Arabia: "IMF staff ’s reference fiscal projections are based primarily on staff ’s interpretation of government policies as outlined in the 2026 budget and recent official announcements. Export oil revenues are based on World Economic Outlook database reference oil price assumptions and the IMF staff ’s understanding of oil production adjustments under the OPEC+ (Organization of the Petroleum Exporting Countries, including Russia and other non-OPEC oil exporters) agreement and those unilaterally announced by Saudi Arabia." - Singapore: - "FY2025 projections are based on revised figures based on budget execution through the end of 2025." - "FY2026 projections are based on the budget released on February 12, 2026." - Slovak Republic: "Fiscal projections are informed by the 2026 budget and reflect staff ’s macroeconomic assumptions." - South Africa: "Fiscal assumptions are informed by the 2026 budget. Nontax revenue excludes transactions in financial assets and liabilities... Eskom debt relief is treated as a capital transfer above-the-line item." - Spain: "Figures for 2021–28 reflect disbursements of grants and loans under the EU Recovery and Resilience Facility." - Sri Lanka: "Fiscal projections are based on IMF staff ’s judgment." - Sudan: "Projections assume that the conflict will end by end-2026 and re-engagement and reconstruction commence shortly thereafter." - Sweden: "Fiscal estimates for 2025 are based on the authorities’ budget bill and have been updated with the authorities’ latest interim forecast. The impact of cyclical developments on the fiscal accounts is calculated using the 2014 Organisation for Economic Co-operation and Development (OECD) study to take into account the output gap." - Switzerland: "The projections assume that fiscal policy is adjusted as necessary to keep fiscal balances in line with the requirements of Switzerland’s fiscal rules." - Türkiye: "The basis for the projections is the IMF-defined fiscal balance, which excludes some revenue and expenditure items that are included in the authorities’ headline balance." - United Kingdom: "Fiscal projections are based on the March 2026 forecast of the Office for Budget Responsibility (OBR) and the January 2026 release on public sector finances from the Office for National Statistics. The IMF staff ’s projections take the OBR forecast as a reference and overlay adjustments for differences in assumptions. Data are presented on a calendar year basis." - United States: "Fiscal projections are based on the February 2026 Congressional Budget Office baseline, adjusted for the IMF staff ’s policy and macroeconomic assumptions. Projections incorporate the effects of the One Big Beautiful Bill Act." - Uruguay: "Projections are based on the authorities’ policies and projections, adjusted to reflect the IMF staff ’s macroeconomic assumptions and assessment of policy plans." - Venezuela: "Projections for 2026–31 are omitted due to an unusually high degree of uncertainty." - Vietnam: "Projections starting in 2026 use the authorities’ 2025 budget numbers and the IMF staff ’s own projections." - Yemen: "Fiscal projections 2026–31 are based on 2025 outturns and take into consideration limited availability of financing and the continued halt of oil exports. Data are focused on the territory under control of the internationally recognized government." - Zambia: "Government net and gross debt projections for 2026–31 are omitted due to debt restructuring." ### Data definitions, coverage, and accounting practices (methodological highlights) - Economy groupings used in the Fiscal Monitor are defined in "Table A. Economy Groupings," covering categories such as Advanced Economies, Emerging Market Economies, Low-Income Developing Countries, G7, and G20. - Coverage notation used throughout tables: CG = central government; GG = general government; LG = local governments; SG = state governments; SS = social security funds; TG = territorial governments; BCG = budgetary central government; NFPS = nonfinancial public sector; NFPC = nonfinancial public corporations; NMPC = nonmonetary financial public corporations; PS = public sector; TG = territorial governments. - Accounting practice labels: A = accrual; C = cash; Mixed = combination of accrual and cash accounting. - Valuation of debt: - "Nominal" = debt securities valued at their nominal values. - "Face" = undiscounted amount of principal to be repaid at (or before) maturity. - "Current market" = debt securities valued at market prices (insurance, pension, standardized guarantee schemes valued equivalently). - Notes on country-specific departures: several country entries specify deviations in coverage, valuation, or accounting practice (for example, Poland: "Data are based on ESA95 2004 and prior. Data are based on ESA 2010 beginning in 2005 (accrual basis)."). ### Key projection omissions, special treatments, and methodological adjustments - Omitted projections: - "Venezuela: Projections for 2026–31 are omitted due to an unusually high degree of uncertainty." - "Zambia: Government net and gross debt projections for 2026–31 are omitted due to debt restructuring." - Conflict- and reconstruction-related assumptions: "Sudan: Projections assume that the conflict will end by end-2026 and re-engagement and reconstruction commence shortly thereafter." - Treatment of exceptional items: - "South Africa: Nontax revenue excludes transactions in financial assets and liabilities... Eskom debt relief is treated as a capital transfer above-the-line item." - Russia: use of windfall oil and gas revenues, National Welfare Fund savings, and transition from benchmark oil price at $40 a barrel to $60 a barrel, with Rub 8 trillion benchmark in transition. - Use of external forecasts and official releases: - United Kingdom: March 2026 OBR forecast and January 2026 ONS public sector finances. - United States: February 2026 CBO baseline and incorporation of the One Big Beautiful Bill Act. - Saudi Arabia: export oil revenues based on World Economic Outlook database reference oil price assumptions and IMF staff understanding of OPEC+ and unilateral production adjustments. ### Selected exact dates and figures referenced in the methodology notes - Rub 8 trillion (benchmark oil and gas revenues fixed in rubles under the 2023–25 modified Russian fiscal rule). - $40 a barrel (benchmark oil price under the 2019 Russian fiscal rule). - $60 a barrel (benchmark oil price proposed by the Ministry of Finance and effective in the 2025 Russian budget under the new rule). - 2026–28 (Nigeria Medium-Term Expenditure Framework). - February 12, 2026 (Singapore budget release used for FY2026 projections). - March 2026 (OBR forecast used for United Kingdom projections). - January 2026 (ONS public sector finances release used for United Kingdom projections). - February 2026 (CBO baseline used for United States projections). - 2026 (multiple country budgets and staff assumptions used across the dataset; many projections begin in 2026). ### Tables and aggregates included (data and indicators covered) - The methodological appendix includes comprehensive country-level tables and aggregates covering: - Overall fiscal balance, primary balance, cyclically adjusted balance, and cyclically adjusted primary balance (2017–31). - General government revenue and expenditure (2017–31). - General government gross debt and net debt (2017–31). - Definitions and coverage tables for Advanced Economies, Emerging Market and Middle-Income Economies, and Low-Income Developing Countries. - Structural fiscal indicators: pension and health-care spending change projections, net present values, gross financing needs, average term to maturity, debt-to-average-maturity, projected interest rate–growth differentials, prepandemic and projected overall balances, nonresident holdings of debt, and net financial worth of general government. - Country notes and table footnotes clarify special coverage issues (for example, where data reflect the nonfinancial public sector, changes in coverage, and adjustments for pension or central bank balances). *Italic line: Source — IMF staff estimates and projections (Methodological and Statistical Appendix, Fiscal Monitor: Fiscal Policy Under Pressure: High Debt, Rising Risks, April 2026).* ### Annex 1.2 ### Annex 1.2 ### Nature of this content unit - An index-style listing of selected topics, boxes, chapters, and online annexes from past Fiscal Monitor issues. - Entries span multiple years and issues, with dates and titles presented exactly as in the source (examples include "April 2026", "October 2021", "April 2020", "October 2017", "April 2011"). *Source: text - Annex 1.2* ### Conclusion and Risk Assessment April 2012, Chapter 7 ### Conclusion and Risk Assessment April 2012, Chapter 7 ### Global outlook and risk assessment - Executive Directors broadly agreed with staff’s assessment of the global economic outlook, risks, and policy priorities. - The war in the Middle East is identified as a significant headwind to the global economy—particularly for the conflict region, energy-importing and lower-income countries and Fragile and Conflict-Affected States—through higher commodity prices, inflation expectations, and tighter financial conditions. - Overall risks to the global outlook are tilted to the downside and could be further amplified through interactions with each other and with pre-existing vulnerabilities. - Downside risks highlighted: - further escalation of geopolitical tensions and supply chain disruptions; - rising fiscal and financial vulnerabilities; - potential fragilities linked to the AI investment boom; - erosion of institutions. - Upside risks are limited to productivity gains from AI and possible renewed momentum in structural reforms. - Directors noted that the likelihood of downside scenarios materializing depends critically on the duration, intensity and scope of the conflict. ### Monetary policy, price stability, and exchange rate guidance - Directors underscored the importance of preserving price stability. - Central banks should be ready to act decisively in line with their mandates to prevent prolonged supply shocks from destabilizing medium-to-long-term inflation expectations, while reserving the option to look through the shocks if they prove transitory and the monetary policy stance is already properly calibrated. - Transparent communication and strong central bank independence are critical for credibility. - Transmission of shocks will differ across countries, reflecting: - varying exposure to commodity markets and the region; - the strength of the anchoring of inflation expectations; - the extent of foreign exchange depreciation. - Where negative demand shocks emerge and activity falls below potential, a reduction in policy rates may be appropriate but only if risks to price stability remain contained. - If imminent risk of excessive or disorderly exchange rate movements emerges, temporary foreign exchange intervention and capital flow management measures may be warranted, alongside appropriate monetary and fiscal policy stances. ### Financial stability and supervisory readiness - Financial stability risks remain elevated, reflecting: - high debt levels and greater rollover risks in core sovereign bond markets; - a more price-sensitive investor base; - a buildup of leverage across nonbank financial intermediaries (NBFIs) and derivative products; - rising interconnectedness between banks and NBFIs; - vulnerabilities in private credit; - growing market concentration risk in AI-related sectors. - Increasingly uneven, debt-heavy capital flows and a strengthened sovereign-bank nexus are also risks to stability in EMDEs. - Directors called on financial supervisors to enhance readiness by: - ensuring robust prudential oversight; - adopting scenario analysis; - strengthening stress testing; - closing data gaps; - maintaining adequate capital, liquidity, and reserve buffers in line with international regulatory standards. ### Fiscal policy, debt sustainability, and social protection - Directors agreed on the urgency of rebuilding fiscal buffers and strengthening sustainability amid high debt and rising risks that could weaken growth and revenues and add to pressures on fiscal balances. - Where support is needed to protect vulnerable households from extreme external shocks, it should be: - temporary; - targeted; - preferably delivered through existing social safety nets and within existing resource envelopes; - designed to avoid price distortions and broad-based measures that are costly and difficult to unwind. - Many countries will need credible medium-term fiscal plans including stronger medium-term anchors, supported by revenue mobilization and improvements in spending efficiency, to ensure sustainability while creating space for long-term spending needs, including defense. - For countries facing tighter financing conditions, credible consolidation and predictable rules remain essential for regaining market confidence. - For low-income developing countries, Directors underscored the importance of domestic revenue mobilization and safeguarding critical social and development spending in the face of declining aid flows. ### Structural reforms, AI, and international cooperation - Directors acknowledged the importance of structural reforms to strengthen medium-term growth and resilience, including: - investment in AI and digitalization to accelerate productivity and growth; - measures to upskill the labor force and increase participation; - improvements to the business climate and streamlined regulations; - enhanced competition and strengthened supply chain resilience. - Accelerating energy transition would support energy diversification and security. - Directors noted the importance of addressing domestic saving-investment imbalances that give rise to excessive external imbalances, and that actions removing domestic distortions through fiscal, structural, and targeted industrial policies can narrow imbalances while enhancing global output. - International cooperation is essential to address immediate threats from the Middle East conflict and longer-term challenges to growth and sustainability. - Governments should cooperate to reduce trade policy uncertainty by re-anchoring trade in clear, predictable rules, including by reducing tariff and non-tariff barriers. - Directors welcomed the Fund’s cooperation with the World Bank and the International Energy Agency for assessment of the impact and policy responses to the crisis. - Directors stressed the key role of a well-resourced Fund in assisting member countries—especially those most affected by the shock from the war, including Fragile and Conflict-Affected States—through tailored policy advice, lending, and capacity development assistance, drawing on lessons from recent crises. - Directors reaffirmed the Fund’s role in promoting multilateral solutions in an evenhanded manner and called for continued efforts to strengthen the G20 Common Framework for Debt Treatments. - A number of Directors also stressed the important role for the Fund in supporting member countries’ climate strategies. ### Concluding procedural note - The following remarks were made by the Chair at the conclusion of the Executive Board’s discussion of the Fiscal Monitor, Global Financial Stability Report, and World Economic Outlook on April 6, 2026. *International Monetary Fund | April 2026* ### CHAPTER 1 ### CHAPTER 1 ### Main title and theme - Fiscal Policy under Pressure: High Debt, Rising Risks ### Publication series and issuer - FISCAL MONITOR - IMF ### Date/issue information - 26 APR *Source: text - CHAPTER 1 (PDF)* --- _Source: https://www.imf.org/-/media/files/publications/fiscal-monitor/2026/april/english/text.pdf_