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IMF: 'High fiscal risks' for advanced economies

Thursday 4 November 2010 - by Andrew Hickley

IMF building in Washington DC

Fiscal risks remain higher for advanced economies while market sentiment is improving towards emerging economies, according to a report released by the International Monetary Fund.

In its latest edition of Fiscal Monitor, Fiscal Exit: From Strategy to Implementation, a study released twice a year, the IMF states that risks for advanced economies are "high by historical standards".

It believes this is due to the possibility of sovereign debt rollovers arising and public debt ratios stabilising at elevated levels, arguing that these risks are "lower, but not insignificant" for emerging markets.

The IMF also states that risks arising from macroeconomic uncertainty are "generally higher" than six months ago, amid concerns that the global recovery from the financial crisis may be losing steam.

It believes that market sentiment towards emerging markets has improved, but has continued to worsen toward advanced economies that were under pressure in May 2010.


In addition, the report discovers that while 90 per cent of countries are committed to lowering their medium-term deficits, few countries have explicitly committed to a long-run target for their public debt ratio, thus "leaving the ultimate fiscal strategy goal uncertain".


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