The IMF fears budget overruns in nearly 80 countries that will hold elections in 2024

The director-general of the International Monetary Fund (IMF) warned on Sunday of the risk of budget overruns in states that hold elections in 2024, when half the world’s population will be called to the polls.

“Almost 80 countries will have elections, and we know what happens, what pressure exists during election cycles,” recalls Kristalina Georgieva in an interview with the France-Presse news agency (AFP).

However, the leader stressed that “countries need to replenish their fiscal reserves and manage their accumulated debt” to cope with the various shocks that have arisen in the wake of the Covid-19 pandemic.

The global economy was stronger than expected in 2023, allowing governments to save, but the IMF chief said efforts should continue while “the economy should experience a soft landing” from the peak in inflation seen last year. two years.

“The monetary policy carried out is correct, but the job is not finished. Therefore, it is important not to ease it too quickly or too late, but also not to pursue fiscal policy” going in the other direction, Georgieva warned.

In 2024, the “lessons learned in recent years” must be applied: “Always be prepared for the unexpected. We must be prepared for the uncertainties that will arise,” which requires a buffer in terms of public finances that many states do not have after three years of successive crises, the leader insisted.

The IMF “is working to help countries find the best measures to maintain, what to continue and where to focus their fiscal policy. Because if monetary policy remains restrictive, if fiscal spending increases, it will defeat the purpose of reducing inflation,” Georgieva warned. .

The debt of all countries has increased significantly, creating difficulties not only in the most vulnerable countries, but also in a number of developing countries that face repayment difficulties in the face of rising interest rates, the IMF leader said.

The cost of government debt “has increased across the board, but remains manageable in many countries because they have had the wisdom to change the structure of their debt,” Georgieva explained.

But “for some countries, the debt problem becomes dramatic, either because they become insolvent or because they have to spend a large portion of their income” paying off debt, limiting their ability to invest and finance basic services, he lamented.