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High debt could slow countries' recoveries: IMF

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Debt accumulated by businesses and individuals worldwide could slow economic recoveries from the pandemic crisis, the International Monetary Fund has warned.

Governments took exceptional measures to support their economies as Covid-19 spread two years ago, including rolling out debt repayment suspensions or offering large-scale loans.

However these programmes resulted in higher debt levels for some sectors, including those most disrupted by the virus, like tourism and restaurants, as well as low income households, the Washington-based crisis lender said.

In a chapter of its World Economic Outlook, the IMF said the debt burden could hold growth back in developed countries by 0.9% and in emerging markets by 1.3% over the next three years. "Financially constrained households and vulnerable firms, which have grown in number and proportion during the Covid-19 pandemic, are expected to cut spending by more, especially in countries where the insolvency framework is inefficient and fiscal space limited," the lender said.

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