Spain’s public debt is currently 14 percentage points higher than the global economy’s debt, according to the IMF’s semi-annual report ‘Fiscal Monitor’. The report also predicts that Spain’s deficit will stop decreasing next year and stabilize at 3.1% of GDP. However, the Minister of Economy, Carlos Body, rejected these forecasts, stating that the IMF did not consider the return of European fiscal rules in 2025, which will lead to further deficit reduction.

The IMF’s Director of the Fiscal Department, Vitor Gaspar, believes that deficits and debt should be reduced faster worldwide. Many countries depend on public deficits for growth, but the adjustment process will pose challenges. The EU will begin applying new fiscal rules to reduce deficits next year, but gradual adjustments are already underway in many economies. These new rules allow for moderate efforts in growing economies with inflation and potential rates close to their targets.

The IMF’s ‘Fiscal Monitor’ emphasizes the need for fiscal policy to allocate state resources to sectors and areas that generate growth and social benefits. However, it points out that industrial policy is becoming increasingly influenced by geopolitical criteria, leading to potential negative effects if the wrong sectors are subsidized. The report also highlights the failures of various industrial policies and the challenges posed by the use of fiscal policy to achieve conflicting objectives.

The global public debt remains high, currently standing at 9 percentage points higher than pre-Covid-19 levels. The IMF’s forecasts indicate that global public debt will continue to grow until the end of the decade, reaching 100% of the Earth’s GDP, the same level seen during the pandemic. Additionally, global primary public spending is seven tenths of GDP higher than before the pandemic, and debt service is increasing due to higher interest rates.

The IMF introduces the concept of a “political double dilemma”, which policymakers must address. This dilemma consists of balancing demands for public spending, resistance to tax increases, and the sustainability of public debt. The IMF generally does not recommend specific sector taxes but does propose taxing excessive profits across all sectors to ensure efficiency in the tax system.