The
IMF said in its 2021 Fiscal Monitor report that if faster global
vaccinations bring the virus under control sooner, more than $1
trillion in additional global tax revenue could be collected
through 2025 in advanced economies.
If that same upside scenario in the Fund's economic forecasts
materializes, global GDP output could increase by $9 trillion
during the same period as businesses reopen and hire more
quickly, the IMF said.
"Vaccination will, thus, more than pay for itself, providing
excellent value for public money invested in ramping up global
vaccine production and distribution," the IMF said in the
report.
The IMF and the World Bank during their virtual Spring Meetings
this week are urging member countries to keep up fiscal support
for their economies and vulnerable citizens and businesses until
the pandemic is firmly under control.
The Fund estimated governments have deployed some $16 trillion
in pandemic-related fiscal support since the pandemic started
through March 17 this year. That includes $10 trillion from
additional spending and foregone revenue, and $6 trillion worth
of government loans, guarantees and capital injections for
businesses.
In 2021, the Fund projects fiscal deficits will shrink slightly
in most countries as pandemic-related support expires or winds
down, unemployment claims drop and revenues start to recover as
businesses reopen.
Average overall budget deficits reached 11.7% of GDP for
advanced economies in 2020 -- quadruple their 2.9% share in 2019
-- but they should narrow to 10.4% in 2021, the IMF said.
Deficits in emerging economies will also shrink slightly in 2021
to 7.7% of GDP for emerging market economies and to 4.9% for
low-income economies.
Average worldwide public debt is projected to hit a record 99%
of GDP in 2021 and to stabilize at that level after rising
slightly from 97% in 2020. For advanced economies, debt will
peak at 122.5% in 2021, up from 120.1% in 2020.
The IMF called for more targeted support for vulnerable
households, including minorities, women and workers in
low-paying jobs in the informal sectors of many economies. More
focused support for small businesses was also needed, it said.
But it said some advanced countries with high debt levels may
need to start rebuilding fiscal buffers to prepare for future
shocks. It said those countries should develop multi-year
frameworks for increasing revenues and rationalizing spending,
giving priority to investments to fight climate change and
reduce economic inequality.
In a Fiscal Monitor chapter released last week, the IMF said
advanced economies could use more progressive income taxes,
inheritance and property taxes, and taxes on "excess" corporate
profits to help reduce inequalities exposed by the COVID-19
pandemic.
(Reporting by David Lawder; Editing by Ana Nicolaci da Costa)
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