IMF warns cutting spending too soon could derail recovery

The health crisis and the business shutdowns to contain the spread of COVID-19 demanded"a massive fiscal response" of close to $11 trillion to help support households and prevent bankruptcies," the authors said.

"But the policy response has also contributed to global public debt reaching its highest level in recorded history, at over 100% of global GDP , in excess of post-World War II peaks."The Washington-based crisis lender, which historically has always advocated for governments to restrain spending, is in the unusual position of urging officials to flood their countries with cash while also sounding the warning about"While the trajectory of public debt could drift up further...

Now the"need for continued fiscal support is clear," Gaspar and Gopinath wrote, but countries also will need to find a way to finance it without debt becoming unsustainable.

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