## 2022. Although output starts recovering beyond 2022, the slower growth and appreciably tighter ## Source details **Canonical URL:** [2022. Although output starts recovering beyond 2022, the slower growth and appreciably tighter](https://www.imf.org/-/media/files/publications/weo/2021/update/july/english/text.pdf) ## Other formats - [Markdown version](/-/media/files/publications/weo/2021/update/july/english/text.pdf.md) - [Structured JSON version](/-/media/files/publications/weo/2021/update/july/english/text.pdf.json) --- ### Scenario impacts on global output and distributional effects - First scenario: - Global output is roughly 1 percent below baseline by 2025. - The cumulative cost in lost global output by 2025 is roughly $4½ trillion. - Emerging market and developing economies’ loss in the first scenario is roughly $3½ trillion. - Second scenario assumptions: - New variant is 50 percent more contagious than the alpha variant. - Vaccine efficacy remains the same against the new strain. - Vaccines will be deployed as expected in the baseline, but vaccine hesitancy will eventually limit the number vaccinated. - Increased infection rates lead to lower mobility even in many advanced economies. - The relationship between mobility and activity is the same as observed during the last quarter of 2020 and the first quarter of 2021. - Second scenario outcomes: - Global growth in 2021 and 2022 is more than 0.8 percentage point weaker than in the baseline. - GDP growth in emerging market and developing economies is roughly 1 percentage point below baseline in 2021 and 2022. - Vaccine hesitancy and global spillovers cost advanced economies about ¾ percentage point of GDP growth in 2021 and 2022. - By 2025, global output is still roughly ½ percent below baseline. - The cumulative loss by 2025 is just under $4½ trillion. - Advanced economies account for a cumulative loss of more than $2½ trillion in the second scenario. ### Effective multilateral action: priorities and financing needs - Highest priority: ensure rapid, worldwide access to vaccines and substantially hasten the timeline of rollout relative to the assumed baseline pace. - IMF staff proposal goal (endorsed by WHO, World Bank, WTO): vaccinate at least 40 percent of the population in every country by the end of 2021 and at least 60 percent by mid-2022, alongside ensuring adequate diagnostics and therapeutics. - Financing needs: - The required up-front grant and concessional loan financing is estimated to be about $50 billion. - Additional grant funding needed to track virus mutations and limit health and economic burden: about $25 billion. - Vaccine sharing target for 2021: - A total of 1 billion doses should be shared in 2021, of which at least 250 million should be made available by September. - Recent G7 commitment: about 500 million doses this year (noted as encouraging but insufficient to meet targets). - Investment needed in additional global vaccine capacity to provide for booster doses and build buffers across the supply chain. ### Global vaccine deployment: status and targets - As of the end of June 2021: - About 3 billion doses had been administered worldwide. - Nearly 75 percent of those doses were in advanced economies and China. - In low-income countries, less than 1 percent of the population had received one dose. - COVAX and AVAT had delivered fewer than 100 million doses to about 90 countries as of the end of June 2021. - Pace of daily global vaccinations at end of June 2021: - About 40 million doses a day globally. - China alone accounting for more than 20 million of those daily doses. - High-income countries account for 7 million doses a day. - Fewer than 100,000 doses a day are being administered in low-income countries. - Nearly half of countries had recent daily vaccination rates below the rate needed to meet the 40 percent target by the end of 2021. ### Priority multilateral actions to ensure equitable access - Urgent need for: - Vaccine donations from countries that have procured excess doses. - Vaccine manufacturers to prioritize deliveries to low- and lower-middle-income countries. - Elimination of export restrictions on vaccines and raw materials. - Upfront public financing and purchase commitments by largest economies to speed process and incentivize investments across raw materials, fill-and-finish, storage, and distribution. ### Supporting financially constrained economies - IMF proposal: General Allocation of Special Drawing Rights (SDR) equivalent to $650 billion. - About $275 billion of the allocation would go to emerging market and developing economies. - Rechanneling SDRs from economies with strong external positions to more vulnerable countries is endorsed by the G7. - Additional multilateral efforts cited include the Debt Service Suspension Initiative. - Where sovereign debt is unsustainable, creditors should work with countries to: - Extend maturities. - Defer interest payments and amortization. - Explicitly write down debt under the Common Framework agreed on by the G20. - A global minimum effective corporate tax that reduces profit shifting would help increase revenue, including in emerging market and developing economies. ### Mitigating climate change: policy package and financing uses - Recommended multipronged strategy with carbon pricing as centerpiece; designed flexibly with alternative mechanisms to achieve equivalent emission outcomes. - Major emitters should spearhead implementation of an international floor on carbon prices, differentiated by country-specific levels of development. - Revenue from carbon pricing can be used to: - Fund compensatory transfers to those hurt by the energy transition. - Boost remedial social spending to offset adverse effects of air pollution on health and cognitive development. - Complementary actions: - Green infrastructure push. - Subsidies for research into green technologies. - Boost renewable energy generation, improve battery storage technology, increase electric vehicle charging stations, retrofit buildings. - The multipronged approach would deliver needed emissions reductions at reasonable transitional global output costs (as noted in Chapter 3 of the October 2020 WEO). ### National-level policy guidance and balancing acts - Three-stage tailoring of policies: - (1) Escape the acute crisis — health spending and targeted support. - (2) Secure the recovery — broader fiscal and monetary support, remedial measures for human capital. - (3) Invest in the future — boost productive capacity, transition to lower carbon dependence, harness digitalization, strengthen social safety nets, education, and worker training. - Fiscal policy: - Continue to prioritize health spending, including vaccine production and distribution infrastructure, personnel, and public health campaigns. - In emerging market and developing economies with limited fiscal space, reorient spending away from untargeted subsidies and recurrent expenditures toward health, social, and infrastructure outlays. - Embed fiscal actions within a credible medium-term fiscal framework and consider preapproved revenue measures for implementation once recovery is secure. - Monetary policy: - Central banks should generally look through transitory inflation pressures and avoid tightening until there is more clarity on underlying price dynamics. - Clear communication from central banks is important; where recovery and vaccination are advanced, central banks can begin telegraphing exit from extraordinary monetary support. - Central banks should be prepared to move quickly if indicators suggest the recovery is strengthening faster than expected. - Financial sector policies: - Move extraordinary 2020 measures toward more targeted support (e.g., focus on still struggling contact-intensive sectors). - Progress on regulatory frameworks for nonbank institutions, intensify supervision, enhance data collection on bank and corporate balance sheets. - Strengthen insolvency frameworks and implement expedited out-of-court restructuring. - Preparing for tighter external financial conditions: - Extend debt maturities where possible, especially for those with large foreign currency borrowing. - Prevent accumulation of balance sheet mismatches. - Social and structural policies: - Incentivize shifts in employment, credit, and other inputs toward emerging growth opportunities (digitalization, lower carbon dependence). - Ensure gains are widely and equitably shared via stronger social safety nets, protecting health and education spending, funding worker training, investing in child and elder care. - Finance these initiatives with more progressive taxation, closing loopholes, and reducing tax expenditures to mitigate inequality and rebuild fiscal buffers. ### Employment and labor market observations - Employment has risen from the trough of the second and third quarters of 2020 but generally remains below pre-pandemic rates. - Employment recovery is highly uneven: youth and low-skilled workers across economies and women in emerging market and developing economies remain harder hit. - Factors keeping employment rates subdued include continuation of the health crisis, workers’ concerns about workplace health risks, firms’ reluctance to hire amid uncertainties, and, in some advanced economies, transfers and unemployment insurance that cushioned income losses but may have delayed reengagement. ### Box 1 — Global financial conditions summary - Financial conditions remain very accommodative—around the 10th percentile of the historical distribution. - After rising about 70 basis points through mid-March, US 10-year nominal rates have declined notably since the beginning of April amid significant volatility. - Decomposition of the move in US rates shows the decline in 10-year rates has been largely driven by lower term premia, partially offset by an upward shift in the expected policy rate path following the June 2021 FOMC meeting. - Real rates have declined, especially five-year real yields five years forward. - Market-based measures of inflation expectations have changed little. - Rates volatility has increased, especially at shorter maturities. - Global equity prices have risen, with largest gains in the United States and Latin America, followed by Europe and emerging Asia. - Global investment-grade and high-yield corporate bond spreads have tightened to post-global financial crisis lows. - Hard currency bond issuance by sovereigns, nonfinancial corporations, and financial firms has been robust across major regions. - Local currency flows to emerging markets (excluding China) remain weak. - Risk: a reassessment of inflation and monetary policy outlook could result in a sudden rise of US interest rates and a sharp tightening in financial conditions, with adverse spillovers to emerging markets. ### BOX 2. FISCAL DEVELOPMENTS AND OUTLOOK — Global fiscal position and recent changes - Global government debt reached an unprecedented level of close to 100 percent of global GDP in 2020 and is projected to remain around that level in 2021 and 2022. - The projected average global fiscal deficit has decreased since the April 2021 WEO by 0.5 percentage points to 8.8 percent of GDP in 2021, driven by lower deficit projections for the United States and China, partially offset by projected higher deficits in Europe (Germany, France, Italy). - Fiscal measures announced to fight the pandemic are estimated at $16.5 trillion as of early July 2021. - Whereas $4.6 trillion of Advanced Economies’ (AEs) pandemic-related revenue and expenditure measures are still to be utilized in 2021 and beyond, in Emerging Market Economies and Low-Income Developing Countries (LIDCs) most measures expired in 2020. ### BOX 2 — Advanced economies (AEs) - Since the April 2021 Fiscal Monitor, advanced economies have continued providing fiscal support to mitigate the impact of the coronavirus pandemic and aid their recoveries. - The Biden administration has proposed two multi-year spending packages equivalent to 18 percent of 2021 GDP: the American Families Plan (US$2 trillion) and the American Jobs Plan (US$2.3 trillion). These packages continue support for vulnerable households and aim to strengthen the recovery; the American Jobs Plan also focuses on enhancing long-term growth and economic transformation by building human and physical capital. - The Next Generation European Union (NGEU) fund issued its first bonds in June, raising €20 billion. - Some EU countries approved supplementary budgets or extended fiscal support in late March and April 2021 (France, Germany, Italy). Liquidity support programs for businesses have been extended in several countries (for instance, Italy, Malta, Portugal). - The 2021 budgets for Australia and Canada each include new multiyear support of about 5 percent of GDP for their recoveries. - Overall, fiscal deficits are projected at 9.9 percent of GDP in 2021, down 0.4 percentage points of GDP from the April 2021 WEO due to greater backloading of US stimulus programs, which more than offset additional COVID-19 related support in other AEs. - Advanced economy debt is projected at 122.5 percent of GDP at end-2021. - Future fiscal action should be anchored by credible medium-term strategies that rebuild fiscal buffers once the recovery is underway; some countries have announced medium-term plans while maintaining current support (for instance, Canada, United Kingdom). ### BOX 2 — Emerging market economies (EMs) - The projected fiscal deficit for 2021 is 7.1 percent of GDP (0.5 percentage point smaller than in the April 2021 WEO). - For some countries the deficit has been lowered based on fiscal outturns in the first part of the year or growth revisions (China, South Africa). In others, additional fiscal measures have been proposed to mitigate the economic consequences of recurring infection waves (Brazil, India). - Government debt is projected to rise to 65.1 percent in 2021, primarily due to China. - Interest rate hikes in some countries to prevent inflation will likely lead to less fiscal policy space to support the economy. - Policies should be embedded in medium-term fiscal frameworks. Those with depleted space and increased fiscal risk should give added weight to preventing disruptive debt dynamics. Countries with credible fiscal rules may be able to pursue more gradual adjustments. ### BOX 2 — Low-Income Developing Countries (LIDCs) - The overall fiscal deficit in 2021 was revised up by 0.3 percentage points from the April 2021 WEO, mainly because of the reemergence of fuel subsidies as well as the additional COVID-19 and security related support in Nigeria. - Still, at 5.2 percent of GDP, the overall fiscal deficit remains well below that of advanced and emerging market economies, reflecting financing constraints—about 60 percent of LIDCs are assessed to be at high risk of or in debt distress. - The public debt-to-GDP ratio for 2021 is projected at 48.5 percent. - Several LIDCs have announced an intention to restructure their debts and some have sought debt relief under the G20 Common Framework (Chad, Ethiopia, and Zambia). - Once the recovery is firm, achieving debt sustainability while pursuing the United Nations Sustainable Development Goals will require raising domestic revenues, improving spending efficiency, developing medium-term fiscal frameworks, and undertaking structural reforms to facilitate private sector activity. ### BOX 2 — Risks, recommendations, and fiscal planning - As part of preparing medium-term fiscal plans, countries should undertake an analysis of risks and mitigation measures given lower buffers, an uncertain outlook, and fiscal vulnerabilities including COVID-19 loans and credit guarantees to firms that could be realized over several years. - Countries, particularly those with high debt and non-reserve currencies, will have less room to maneuver if global interest rates rise more than expected. *World Economic Outlook Update, International Monetary Fund | July 2021* ### 2022. Although output starts recovering beyond 2022, the slower growth and appreciably tighter ### 2022. Although output starts recovering beyond 2022, the slower growth and appreciably tighter ### Scenario impacts on global output and distributional effects - First scenario: global output is roughly 1 percent below baseline by 2025. - The cumulative cost in lost global output by 2025 is roughly $4½ trillion. - Emerging market and developing economies’ loss in the first scenario is roughly $3½ trillion. - Second scenario assumptions: - New variant is 50 percent more contagious than the alpha variant. - Vaccine efficacy remains the same against the new strain. - Vaccines will be deployed as expected in the baseline, but vaccine hesitancy will eventually limit the number vaccinated. - Increased infection rates lead to lower mobility even in many advanced economies. - The relationship between mobility and activity is the same as observed during the last quarter of 2020 and the first quarter of 2021. - Second scenario outcomes: - Global growth in 2021 and 2022 is more than 0.8 percentage point weaker than in the baseline. - GDP growth in emerging market and developing economies is roughly 1 percentage point below baseline in 2021 and 2022. - Vaccine hesitancy and global spillovers cost advanced economies about ¾ percentage point of GDP growth in 2021 and 2022. - By 2025, global output is still roughly ½ percent below baseline. - The cumulative loss by 2025 is just under $4½ trillion. - Advanced economies account for a cumulative loss of more than $2½ trillion in the second scenario. ### Effective multilateral action: priorities and financing needs - Highest priority: ensure rapid, worldwide access to vaccines and substantially hasten the timeline of rollout relative to the assumed baseline pace. - IMF staff proposal goal (endorsed by WHO, World Bank, WTO): vaccinate at least 40 percent of the population in every country by the end of 2021 and at least 60 percent by mid-2022, alongside ensuring adequate diagnostics and therapeutics. - The required up-front grant and concessional loan financing is estimated to be about $50 billion. - Additional grant funding needed to track virus mutations and limit health and economic burden: about $25 billion. - Recommended vaccine sharing target for 2021: a total of 1 billion doses should be shared in 2021, of which at least 250 million should be made available by September. - Recent G7 commitment: about 500 million doses this year (noted as encouraging but insufficient to meet targets). - Investment needed in additional global vaccine capacity to provide for booster doses and build buffers across the supply chain. ### Global vaccine deployment: status and targets - As of the end of June 2021: - About 3 billion doses had been administered worldwide. - Nearly 75 percent of those doses were in advanced economies and China. - In low-income countries, less than 1 percent of the population had received one dose. - COVAX and AVAT had delivered fewer than 100 million doses to about 90 countries as of the end of June 2021. - Pace of daily global vaccinations at end of June 2021: - About 40 million doses a day globally. - China alone accounting for more than 20 million of those daily doses. - High-income countries account for 7 million doses a day. - Fewer than 100,000 doses a day are being administered in low-income countries. - Nearly half of countries had recent daily vaccination rates below the rate needed to meet the 40 percent target by the end of 2021. ### Priority multilateral actions to ensure equitable access - Urgent need for: - Vaccine donations from countries that have procured excess doses. - Vaccine manufacturers to prioritize deliveries to low- and lower-middle-income countries. - Elimination of export restrictions on vaccines and raw materials. - Upfront public financing and purchase commitments by largest economies to speed process and incentivize investments across raw materials, fill-and-finish, storage, and distribution. ### Supporting financially constrained economies - IMF proposal: General Allocation of Special Drawing Rights (SDR) equivalent to $650 billion. - About $275 billion of the allocation would go to emerging market and developing economies. - Rechanneling SDRs from economies with strong external positions to more vulnerable countries is endorsed by the G7. - Additional multilateral efforts cited include the Debt Service Suspension Initiative. - Where sovereign debt is unsustainable, creditors should work with countries to: - Extend maturities. - Defer interest payments and amortization. - Explicitly write down debt under the Common Framework agreed on by the G20. - A global minimum effective corporate tax that reduces profit shifting would help increase revenue, including in emerging market and developing economies. ### Mitigating climate change: policy package and financing uses - Recommended multipronged strategy with carbon pricing as centerpiece; designed flexibly with alternative mechanisms to achieve equivalent emission outcomes. - Major emitters should spearhead implementation of an international floor on carbon prices, differentiated by country-specific levels of development. - Revenue from carbon pricing can be used to: - Fund compensatory transfers to those hurt by the energy transition. - Boost remedial social spending to offset adverse effects of air pollution on health and cognitive development. - Complementary actions: - Green infrastructure push. - Subsidies for research into green technologies. - Boost renewable energy generation, improve battery storage technology, increase electric vehicle charging stations, retrofit buildings. - The multipronged approach would deliver needed emissions reductions at reasonable transitional global output costs (as noted in Chapter 3 of the October 2020 WEO). ### National-level policy guidance and balancing acts - Policies should be tailored to the stage of the crisis: (1) escape the acute crisis (health spending and targeted support), (2) secure the recovery (broader fiscal and monetary support, remedial measures for human capital), (3) invest in the future (boost productive capacity, transition to lower carbon dependence, harness digitalization, strengthen social safety nets, education, and worker training). - Fiscal policy: - Continue to prioritize health spending, including vaccine production and distribution infrastructure, personnel, and public health campaigns. - In emerging market and developing economies with limited fiscal space, reorient spending away from untargeted subsidies and recurrent expenditures toward health, social, and infrastructure outlays. - Embed fiscal actions within a credible medium-term fiscal framework and consider preapproved revenue measures for implementation once recovery is secure. - Monetary policy: - Central banks should generally look through transitory inflation pressures and avoid tightening until there is more clarity on underlying price dynamics. - Clear communication from central banks is important; where recovery and vaccination are advanced, central banks can begin telegraphing exit from extraordinary monetary support. - Central banks should be prepared to move quickly if indicators suggest the recovery is strengthening faster than expected. - Financial sector policies: - Move extraordinary 2020 measures toward more targeted support (e.g., focus on still struggling contact-intensive sectors). - Progress on regulatory frameworks for nonbank institutions, intensify supervision, enhance data collection on bank and corporate balance sheets. - Strengthen insolvency frameworks and implement expedited out-of-court restructuring. - Preparing for tighter external financial conditions: - Extend debt maturities where possible, especially for those with large foreign currency borrowing. - Prevent accumulation of balance sheet mismatches. - Social and structural policies: - Incentivize shifts in employment, credit, and other inputs toward emerging growth opportunities (digitalization, lower carbon dependence). - Ensure gains are widely and equitably shared via stronger social safety nets, protecting health and education spending, funding worker training, investing in child and elder care. - Finance these initiatives with more progressive taxation, closing loopholes, and reducing tax expenditures to mitigate inequality and rebuild fiscal buffers. ### Employment and labor market observations - Employment has risen from the trough of the second and third quarters of 2020 but generally remains below pre-pandemic rates. - Employment recovery is highly uneven: youth and low-skilled workers across economies and women in emerging market and developing economies remain harder hit. - Factors keeping employment rates subdued include continuation of the health crisis, workers’ concerns about workplace health risks, firms’ reluctance to hire amid uncertainties, and, in some advanced economies, transfers and unemployment insurance that cushioned income losses but may have delayed reengagement. ### Box 1 — Global financial conditions summary - Financial conditions remain very accommodative—around the 10th percentile of the historical distribution. - After rising about 70 basis points through mid-March, US 10-year nominal rates have declined notably since the beginning of April amid significant volatility. - Decomposition of the move in US rates shows the decline in 10-year rates has been largely driven by lower term premia, partially offset by an upward shift in the expected policy rate path following the June 2021 FOMC meeting. - Real rates have declined, especially five-year real yields five years forward. - Market-based measures of inflation expectations have changed little. - Rates volatility has increased, especially at shorter maturities. - Global equity prices have risen, with largest gains in the United States and Latin America, followed by Europe and emerging Asia. - Global investment-grade and high-yield corporate bond spreads have tightened to post-global financial crisis lows. - Hard currency bond issuance by sovereigns, nonfinancial corporations, and financial firms has been robust across major regions. - Local currency flows to emerging markets (excluding China) remain weak. - Risk: a reassessment of inflation and monetary policy outlook could result in a sudden rise of US interest rates and a sharp tightening in financial conditions, with adverse spillovers to emerging markets. *World Economic Outlook Update, International Monetary Fund | July 2021* ### BOX 2. FISCAL DEVELOPMENTS AND OUTLOOK ### BOX 2. FISCAL DEVELOPMENTS AND OUTLOOK ### Global fiscal position and recent changes - Global government debt reached an unprecedented level of close to 100 percent of global GDP in 2020 and is projected to remain around that level in 2021 and 2022. - The projected average global fiscal deficit has decreased since the April 2021 WEO by 0.5 percentage points to 8.8 percent of GDP in 2021, driven by lower deficit projections for the United States and China, partially offset by projected higher deficits in Europe (Germany, France, Italy). - Fiscal measures announced to fight the pandemic are estimated at $16.5 trillion as of early July 2021. - Whereas $4.6 trillion of Advanced Economies’ (AEs) pandemic-related revenue and expenditure measures are still to be utilized in 2021 and beyond, in Emerging Market Economies and Low-Income Developing Countries (LIDCs) most measures expired in 2020. ### Advanced economies (AEs) - Since the April 2021 Fiscal Monitor, advanced economies have continued providing fiscal support to mitigate the impact of the coronavirus pandemic and aid their recoveries. - The Biden administration has proposed two multi-year spending packages equivalent to 18 percent of 2021 GDP: the American Families Plan (US$2 trillion) and the American Jobs Plan (US$2.3 trillion). These packages continue support for vulnerable households and aim to strengthen the recovery; the American Jobs Plan also focuses on enhancing long-term growth and economic transformation by building human and physical capital. - The Next Generation European Union (NGEU) fund issued its first bonds in June, raising €20 billion. - Some EU countries approved supplementary budgets or extended fiscal support in late March and April 2021 (France, Germany, Italy). Liquidity support programs for businesses have been extended in several countries (for instance, Italy, Malta, Portugal). - The 2021 budgets for Australia and Canada each include new multiyear support of about 5 percent of GDP for their recoveries. - Overall, fiscal deficits are projected at 9.9 percent of GDP in 2021, down 0.4 percentage points of GDP from the April 2021 WEO due to greater backloading of US stimulus programs, which more than offset additional COVID-19 related support in other AEs. - Advanced economy debt is projected at 122.5 percent of GDP at end-2021. - Future fiscal action should be anchored by credible medium-term strategies that rebuild fiscal buffers once the recovery is underway; some countries have announced medium-term plans while maintaining current support (for instance, Canada, United Kingdom). ### Emerging market economies (EMs) - The projected fiscal deficit for 2021 is 7.1 percent of GDP (0.5 percentage point smaller than in the April 2021 WEO). - For some countries the deficit has been lowered based on fiscal outturns in the first part of the year or growth revisions (China, South Africa). In others, additional fiscal measures have been proposed to mitigate the economic consequences of recurring infection waves (Brazil, India). - Government debt is projected to rise to 65.1 percent in 2021, primarily due to China. - Interest rate hikes in some countries to prevent inflation will likely lead to less fiscal policy space to support the economy. - Policies should be embedded in medium-term fiscal frameworks. Those with depleted space and increased fiscal risk should give added weight to preventing disruptive debt dynamics. Countries with credible fiscal rules may be able to pursue more gradual adjustments. ### Low-Income Developing Countries (LIDCs) - The overall fiscal deficit in 2021 was revised up by 0.3 percentage points from the April 2021 WEO, mainly because of the reemergence of fuel subsidies as well as the additional COVID-19 and security related support in Nigeria. - Still, at 5.2 percent of GDP, the overall fiscal deficit remains well below that of advanced and emerging market economies, reflecting financing constraints—about 60 percent of LIDCs are assessed to be at high risk of or in debt distress. - The public debt-to-GDP ratio for 2021 is projected at 48.5 percent. - Several LIDCs have announced an intention to restructure their debts and some have sought debt relief under the G20 Common Framework (Chad, Ethiopia, and Zambia). - Once the recovery is firm, achieving debt sustainability while pursuing the United Nations Sustainable Development Goals will require raising domestic revenues, improving spending efficiency, developing medium-term fiscal frameworks, and undertaking structural reforms to facilitate private sector activity. ### Risks, recommendations, and fiscal planning - As part of preparing medium-term fiscal plans, countries should undertake an analysis of risks and mitigation measures given lower buffers, an uncertain outlook, and fiscal vulnerabilities including COVID-19 loans and credit guarantees to firms that could be realized over several years. - Countries, particularly those with high debt and non-reserve currencies, will have less room to maneuver if global interest rates rise more than expected. *Source: WORLD ECONOMIC OUTLOOK UPDATE, International Monetary Fund | July 2021* --- _Source: https://www.imf.org/-/media/files/publications/weo/2021/update/july/english/text.pdf_