The economist warned about the risk of crowding out private investments by the public sector due to government debt

The growth of public debt threatens to displace private investment by the public sector, which may lead to lower credit ratings and new debt restructurings. Denis Astafyev, an entrepreneur, fund manager and founder of the SharesPro fintech platform, told Izvestia on October 8.

"Global debt is indeed reaching historic highs: according to the IMF, the total liabilities of states have exceeded $100 trillion and are already approaching 93% of global GDP. The problem is that with higher rates than before the pandemic, the cost of debt service increases. For developed economies, this means a narrowing of the "fiscal space", and for developing countries, the threat of debt crises and the dependence of banking systems on sovereign borrowing. In such a situation, the risk of crowding out private investment by the public sector increases, and threats of downgrades and new restructurings increase," the expert said.

According to him, the International Monetary Fund (IMF) emphasizes the importance of long-term fiscal adjustment. Astafyev noted that states need not so much to increase costs as to distribute them more efficiently, shifting their focus towards infrastructure, education and healthcare.

"In practice, this will lead to a tightening of tax policy, expansion of domestic borrowing markets and stricter control over expenses. The main risk to the global economy is a prolonged period of low growth with record debts; the main recipe for stabilization is a predictable fiscal policy and increased returns from each budget ruble," the economist concluded.

In a hasty mess: The EU is afraid to include sanctions against China and India in the 20th package

They want to adopt the new restrictions by the end of 2025, but the work on them shows that the EU's pressure on Russia has reached an impasse.

The head of the International Monetary Fund (IMF) Kristalina Georgieva announced on the same day that global public debt will exceed the volume of the entire global economy in 2029. She also noted that the growing demand for gold is an alarming signal that the global economy may face a test of resilience. Georgieva added that the effect of the US import duties on the global economy has not yet manifested itself.

All important news is on the Izvestia channel in the MAX messenger.