The International Monetary Fund (IMF) is closely monitoring potential market liquidity risks as countries move to refinance debt issued during the pandemic, warns Gita Gopinath, the IMF’s first Deputy Managing Director. Expressing concern over the already elevated debt levels, Gopinath points out the additional worry of projected fiscal deficits surpassing pre-pandemic levels. This highlights the IMF’s vigilance amid global economic challenges and the potential impact on financial stability.
via Reuters:
“Many countries borrowed a lot during the pandemic. That was short term in nature, and that’s coming due, so I think liquidity risks are something we should pay attention to”, Gopinath said.The impact of the pandemic, which gummed up the transport of goods, particularly from China, prompting countries to increase domestic production or seek alternative supplies, and Russia’s invasion of Ukraine that drove up energy and commodity prices, have forced governments to boost their spending and borrow more.
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