Latest news with #FiscalMonitor
The Journal
10-06-2025
- Business
- The Journal
Watchdog warns that Government's fiscal plans 'lack credibility' as spending to overrun again
THE GOVERNMENT'S FISCAL plans 'lack credibility', the Irish Fiscal Advisory Council has warned, as the Department of Public Expenditure has failed to turn over its monthly spending profiles to allow the council to forecast beyond 2026. The council's chairperson Seamus Coffey yesterday briefed reporters on today's Fiscal Assessment Report. The report, with the tagline 'Ireland's outlook: strong today, uncertain tomorrow', warned of the current volatility of Ireland's longtime reliance on corporation tax as uncertainty arises from mooted tariffs from the US and further trade tensions. Coffey highlighted that despite the strength of Ireland's economy and financial surpluses, without these factors, there is a structural deficit of 2.4% of gross national income (previously known as gross national product) – equivalent to €2,500 per worker. The council has been unable to construct a medium-term forecast due to the department's failure to turn over spending profiles, as well as the government's refusal to commit to a fiscal rule. Fiscal rules are permanent constraints on a government's fiscal policy. It is suggested that the failure to turn over spending profiles to the council and the fact that departmental spending ceilings for 2026 and 2027 have not been published is due to potential transfer of functions within the department that is ongoing. Ministers Paschal Donohoe and Jack Chambers pictured in the Department of Finance after the publication of the Annual Progress Report 2025 and April's Fiscal Monitor. Leah Farrell / © Leah Farrell / © / © Coffey said that this highlights that there is no medium-term plan or strategy apparent. The council's report found that the government is overspending in certain areas but emphasised the importance of investing in infrastructure and competitiveness. Employment is at a record high. The growth has been driven by the state and multinationals. Financial services, computer programming and basic pharma products account for roughly 300,000 people in employment in Ireland, the council said. 'Choices must be made. You can't do everything at once,' Coffey said of the government's list of stated priorities. 'In some areas, we can look at maybe where spending could happen that mightn't generate domestic pressures. Advertisement 'When it comes to infrastructure, a lot of it probably has to be supplied domestically. So you look at housing, transport, an issue there is if you spend additional money, where are the resources going to come from to generate the additional output? 'If the unemployment rate is just over 4%, you don't have this big stock of construction staff just sitting there and say, 'Oh, we're spending three billion on extra infrastructure that's going to give us his extra output'. It might just end up having more money chasing fixed resources and just driving up the prices.' Concerns were raised regarding the credibility of budget forecasts, as the department has not accounted for spending overruns in 2024 and 2025. It has also not accounted for the once-off double week Christmas bonus social welfare payment. The predicted overspend is mostly the result of poor budgeting, the council said. Corporation tax is likely to be higher than forecast, the report found. This has been put down to BEPS (anti-base erosion profit shifting) reforms that mean groups with a turnover of over €750m will pay a 15% minimum rate of tax in every jurisdiction in which they operate. Some 30 to 40% of corporation tax paid by US multinational companies in Ireland comes from three companies, the council said its analysis suggests. It did not identify the three firms. Ireland's record export of pharma products earlier this year mean that exports are likely to be above its forecast, even if the level weakens considerably across the remainder of 2025. The Irish Fiscal Advisory Council has issued four key recommendations to the government on the back of its report, the first being for the government to commit to a fiscal rule. It also recommended that the government use budgetary policy to 'reduce the ups and downs of the economic cycle', meaning that it shows restraint when the economy is string, like at present, and being more generous when it is struggling. The council advised that the government set realistic spending forecasts and move towards medium-term budgeting, calling on it to include previous overruns to paint a more accurate and clearer picture of Ireland's current fiscal situation. 'No matter how the economy evolves, Ireland needs to address shortages of key infrastructure,' the council stated. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
Economic Times
05-06-2025
- Business
- Economic Times
Why RBI will hit a hattrick of 25 bps rate cut tomorrow
This move aims to boost economic activity, encourage borrowing and investment, and foster job creation, marking the third consecutive rate cut. The global setting is characterized by heightened geopolitical tensions, viz., Russia-Ukraine war, the Middle Eastern situation, etc., and a precarious fisc with ' tremendous ' pressures for more spending on defense, climate, and aging populations. These aspects are starkly reflected in global public debt mounting to 100 % of global GDP by the end of the decade (IMF's Fiscal Monitor) and higher long-term borrowing costs. An uncertain global trading system marked by trade protectionism and tariff turmoil causes extensive concern. Geopolitical events heightened economic instability, amplified sector-specific risks, and intensified regulatory uncertainties. These geopolitical events accentuated global tensions, disrupted trade, and made the global markets volatile, affecting investor confidence and capital flows into emerging markets like India. This assumes greater significance for energy, infrastructure, and manufacturing, which are sensitive to international trade dynamics and supply chain disruptions. The Court of International Trade struck down President Donald Trump's sweeping ' Liberation Day ' tariffs, ruling that he lacked the 'unbounded authority' to impose across-the-board import taxes on the entire world under the International Emergency Economic Powers Act. These concerns have been exacerbated by President Donald Trump's 1000-page ' Big, Beautiful Bill .' While the Bill is ' big ,' there have been concerns about its ' beautiful ' nature due to a hike in the USA's already bloated and unsustainable deficit resulting from extended tax cuts and an aggravated skew in the distribution of income and wealth. The US grew by 2.8 % in 2024. But, in January-March 2025, growth turned -0.2 % due to policy uncertainties and geopolitical risks. The Fed is wary of cutting rates, despite declining growth prospects. Further, the labour market was expected to weaken, with the unemployment rate likely to exceed its natural rate by the end of this year. Overall, risks are tilted to the ongoing policy uncertainty, the Eurozone's Economic Sentiment Indicator rose 1pt to 94.8 in May because of an upgraded outlook for household finances and industrial performance. In the UK, a sustainable world trading system is basic to the economy. While trade facilitates specialization and productivity, post-COVID supply-chain frailty has damaged the rules-based system. The ominous impact of trade wars and escalating tariffs on growth and inflation across countries has been effectively demonstrated. Shared prosperity necessitates a more connected, secure, and efficient trading environment - an environment marked by strong standards and international cooperation. Major central banks, including the US Federal Reserve, the European Central Bank, and the Bank of England, are expected to adopt a dovish stance, keeping interest rates low to bolster languishing economic Indian Macroeconomy India's economy rose 7.4% in Q4 of FY 2025, exceeding expectations, despite heightened global uncertainties. This is the strongest quarterly growth in FY 25, accelerating from 5.6 % growth in Q2 and 6.4% in Q3. India's GDP growth rose 6.5% in FY 25, the lowest in four years (9.2 % in FY 24 and 7.6 % in FY23). The growth outlook in Asia's third-largest economy remains relatively robust, making it the world's fastest-growing major economy again, thanks to strong domestic consumption, government investments, and a relatively lower dependence on exports. Sectorally, manufacturing, construction, financial real estate, professional services, and public administration, defence, etc., performed well. However, private consumption growth slowed, and government final consumption expenditure shrank in Q4 of FY25 after two quarters. ' Improving domestic consumption is likely to support industrial activity... domestic consumption demand to improve, driven by healthy agricultural growth, easing inflation, supporting discretionary spend and income tax relief this fiscal '. But this growth will require continued recovery in domestic demand and support from both monetary and fiscal stimulus. The real GDP growth reflects the economy's underlying strength and resilience, driven by robust domestic demand, sustained government capex, and gradual recovery in private investment. Industrial production rose modestly to an eight-month low of 2.7% in April 2025 (5.2% in April 2024), and a 4% rise in industrial output in FY 25, which was the lowest in four years. While manufacturing (3.4%) and electricity (1.1%) grew, mining shrank (0.2%) in April, the first since August 2024. Persisting contraction in consumer non-durables' output for the third successive month manifested in low rural consumption despite CPI inflation reaching an almost 6-year low at 3.16% in April. India's foodgrain production rose 6.6 % to reach 354 million tonne (MT) in FY 25, including record production of all major crops, rice, paddy, maize, wheat, etc. India's economic trajectory remains resilient despite global headwinds and regional geopolitical tensions, including persistent border concerns with Pakistan, because of a ' pickup in private consumption, healthy balance sheets of banks and corporates, easing financial conditions, and the government's continued thrust on capital expenditure '. India will continue to be the fastest-growing major economy in the world and consolidate its economic size and heft in the comity of nations. While external uncertainties, such as supply chain disruptions and energy market volatility, pose challenges, India continues to benefit from demographic dividend, ascendant middle class, huge markets with rising consumption demand, strong service sector performance, an accent on infrastructure and capex, a stable banking system, and improving manufacturing output under schemes like PLI. External sector risks, tariff disputes, ease of doing business, credit delivery to the target group, tax reforms, and expenditure rationalization, however, cause some concern. Credit growth is expected to remain robust, driven by economic growth, consumption, and investment. Bank credit moderated to 11.2 % as on April 18, 2025, compared to 15.3 % in the previous year. Domestic bond yields fell to multi-year lows because of successive rate cuts and liquidity-boosting measures by the RBI. Both credit and monetary conditions are in sync with the RBI's plan to support the economy while containing remains volatile because of advance tax and GST outflows and government cash balances with the RBI. Liquidity remained in surplus as reflected in average daily net absorption under the liquidity adjustment facility (LAF), increasing to ₹1,605 crore during FY 25 from ₹485 crore in FY 24. The RBI conducted market operations, including open market operations (OMO) purchases, USD/INR buy/sell swaps, and longer tenor variable rate repo (VRR) operations, besides reducing the CRR by 50 bps (in two tranches of 25 bps each), to provide durable liquidity to the system. The RBI transferred ₹2.69 lakh crore surplus to the government. Inflation remained within the target in FY 25, aided by easing vegetable prices. Headline inflation moderated to 4.6 % during FY 25 from 5.4 % in the previous year, largely driven by moderating core (CPI excluding food and fuel) inflation to 3.5 % and deflation in fuel at 2.5 %. However, the rise in core inflation in the second half of the year occurred because of surging global gold prices. Other tailwinds are above normal monsoon, early arrival of the southwest monsoon, elevated reservoir level, favourable rainfall outlook, and softening food inflation. Crude prices are expected to remain volatile because of global demand, supply disruptions, and geopolitical inflation softened to 3.2 % in April, the lowest since July 2019, from 3.3 % in March because of a sustained fall in food prices. CPI inflation is expected to remain range-bound, driven by factors such as food prices, fuel prices, and economic growth. With benign inflation (inflation remaining below the 4 % from February to April 2025) and plunging inflation, the CPI is likely to durably align with the 4 % target over 2 months, inducing the RBI to cut policy rates by 25 bps to 5.75 % in June. A downward bias in FY26 CPI inflation will be symptomatic of the depth of the rate-cutting is expected to moderate from 4.9% in FY25 to 4.3% in FY26. However, inflationary risks persist because of global commodity prices and any escalation in geopolitical tensions. Under the flexible inflation targeting (FIT) framework, the RBI has been mandated by the government to maintain CPI at 4 % with a band of +/-2 %. Decelerating inflation and moderate growth warrant ' monetary policy to be growth supportive, while remaining watchful about the rapidly evolving global macroeconomic conditions ' (RBI's Annual Report for 2024-25). The RBI is likely to revise its projections on real GDP and inflation for RBI has already cut the Repo Rate twice in 2025- in February and in April, by 25 bps each. These cuts reduced the key lending rate to 6%. Further, the RBI also changed its stance from 'neutral' to 'accommodative' in April. Accordingly, most banks reduced their repo-linked lending rates. Lenders also lowered their marginal cost of funds-based lending rate (MCLR), with a beneficial impact on interest-rate sensitive segments, viz., real estate, small businesses, and home loans.A further 25-bps cut in the Repo Rate will drive economic traction, promote borrowing, investment, and growth, and enhance job creation by making it cheaper for people to borrow money. A 25-bps reduction in the Repo Rate will cause a corresponding drop in all external benchmark lending rates (EBLR), with equated monthly installments (EMIs) on home and personal loans decreasing by 25 bps. A boost in real estate will have a multiplier effect on the economy, particularly in sectors like cement, steel, and construction would be the third consecutive reduction in the Repo rate since February 2025. Since inflation is within the RBI's target band, and given the likely growth-inflation dynamics, we expect another reduction of 50 bps in FY26. The MPC is likely to retain the 'accommodative' monetary policy stance adopted in April 2025. (The author is Chief Economist, Infomerics Valuation and Ratings) (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Time of India
05-06-2025
- Business
- Time of India
Why RBI will hit a hattrick of 25 bps rate cut tomorrow
The global setting is characterized by heightened geopolitical tensions, viz., Russia-Ukraine war, the Middle Eastern situation, etc., and a precarious fisc with ' tremendous ' pressures for more spending on defense, climate, and aging populations. These aspects are starkly reflected in global public debt mounting to 100 % of global GDP by the end of the decade (IMF's Fiscal Monitor ) and higher long-term borrowing costs. An uncertain global trading system marked by trade protectionism and tariff turmoil causes extensive concern. Geopolitical events heightened economic instability, amplified sector-specific risks, and intensified regulatory uncertainties. These geopolitical events accentuated global tensions, disrupted trade, and made the global markets volatile, affecting investor confidence and capital flows into emerging markets like India. This assumes greater significance for energy, infrastructure, and manufacturing, which are sensitive to international trade dynamics and supply chain disruptions. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Collagen is not needed, 42-year-old woman's skin changes URUHIME MOMOKO Learn More Undo The Court of International Trade struck down President Donald Trump's sweeping ' Liberation Day ' tariffs, ruling that he lacked the 'unbounded authority' to impose across-the-board import taxes on the entire world under the International Emergency Economic Powers Act. These concerns have been exacerbated by President Donald Trump's 1000-page ' Big, Beautiful Bill .' While the Bill is ' big ,' there have been concerns about its ' beautiful ' nature due to a hike in the USA's already bloated and unsustainable deficit resulting from extended tax cuts and an aggravated skew in the distribution of income and wealth. The US grew by 2.8 % in 2024. But, in January-March 2025, growth turned -0.2 % due to policy uncertainties and geopolitical risks. The Fed is wary of cutting rates, despite declining growth prospects. Further, the labour market was expected to weaken, with the unemployment rate likely to exceed its natural rate by the end of this year. Overall, risks are tilted to the downside. Despite ongoing policy uncertainty, the Eurozone's Economic Sentiment Indicator rose 1pt to 94.8 in May because of an upgraded outlook for household finances and industrial performance. Live Events In the UK, a sustainable world trading system is basic to the economy. While trade facilitates specialization and productivity, post-COVID supply-chain frailty has damaged the rules-based system. The ominous impact of trade wars and escalating tariffs on growth and inflation across countries has been effectively demonstrated. Shared prosperity necessitates a more connected, secure, and efficient trading environment - an environment marked by strong standards and international cooperation. Major central banks, including the US Federal Reserve , the European Central Bank, and the Bank of England, are expected to adopt a dovish stance, keeping interest rates low to bolster languishing economic growth. The Indian Macroeconomy India's economy rose 7.4% in Q4 of FY 2025, exceeding expectations, despite heightened global uncertainties. This is the strongest quarterly growth in FY 25, accelerating from 5.6 % growth in Q2 and 6.4% in Q3. India's GDP growth rose 6.5% in FY 25, the lowest in four years (9.2 % in FY 24 and 7.6 % in FY23). The growth outlook in Asia's third-largest economy remains relatively robust, making it the world's fastest-growing major economy again, thanks to strong domestic consumption, government investments, and a relatively lower dependence on exports. Sectorally, manufacturing, construction, financial real estate, professional services, and public administration, defence, etc., performed well. However, private consumption growth slowed, and government final consumption expenditure shrank in Q4 of FY25 after two quarters. ' Improving domestic consumption is likely to support industrial activity... domestic consumption demand to improve, driven by healthy agricultural growth, easing inflation, supporting discretionary spend and income tax relief this fiscal '. But this growth will require continued recovery in domestic demand and support from both monetary and fiscal stimulus. The real GDP growth reflects the economy's underlying strength and resilience, driven by robust domestic demand, sustained government capex, and gradual recovery in private investment. Industrial production rose modestly to an eight-month low of 2.7% in April 2025 (5.2% in April 2024), and a 4% rise in industrial output in FY 25, which was the lowest in four years. While manufacturing (3.4%) and electricity (1.1%) grew, mining shrank (0.2%) in April, the first since August 2024. Persisting contraction in consumer non-durables' output for the third successive month manifested in low rural consumption despite CPI inflation reaching an almost 6-year low at 3.16% in April. India's foodgrain production rose 6.6 % to reach 354 million tonne (MT) in FY 25, including record production of all major crops, rice, paddy, maize, wheat, etc. India's economic trajectory remains resilient despite global headwinds and regional geopolitical tensions, including persistent border concerns with Pakistan, because of a ' pickup in private consumption, healthy balance sheets of banks and corporates, easing financial conditions, and the government's continued thrust on capital expenditure '. India will continue to be the fastest-growing major economy in the world and consolidate its economic size and heft in the comity of nations. While external uncertainties, such as supply chain disruptions and energy market volatility, pose challenges, India continues to benefit from demographic dividend, ascendant middle class, huge markets with rising consumption demand, strong service sector performance, an accent on infrastructure and capex, a stable banking system, and improving manufacturing output under schemes like PLI. External sector risks, tariff disputes, ease of doing business, credit delivery to the target group, tax reforms, and expenditure rationalization, however, cause some concern. Bank Credit Credit growth is expected to remain robust, driven by economic growth, consumption, and investment. Bank credit moderated to 11.2 % as on April 18, 2025, compared to 15.3 % in the previous year. Bond Yields Domestic bond yields fell to multi-year lows because of successive rate cuts and liquidity-boosting measures by the RBI . Both credit and monetary conditions are in sync with the RBI's plan to support the economy while containing inflation. Liquidity Liquidity remains volatile because of advance tax and GST outflows and government cash balances with the RBI. Liquidity remained in surplus as reflected in average daily net absorption under the liquidity adjustment facility (LAF), increasing to ₹1,605 crore during FY 25 from ₹485 crore in FY 24. The RBI conducted market operations, including open market operations (OMO) purchases, USD/INR buy/sell swaps, and longer tenor variable rate repo (VRR) operations, besides reducing the CRR by 50 bps (in two tranches of 25 bps each), to provide durable liquidity to the system. The RBI transferred ₹2.69 lakh crore surplus to the government. Inflation Inflation remained within the target in FY 25, aided by easing vegetable prices. Headline inflation moderated to 4.6 % during FY 25 from 5.4 % in the previous year, largely driven by moderating core (CPI excluding food and fuel) inflation to 3.5 % and deflation in fuel at 2.5 %. However, the rise in core inflation in the second half of the year occurred because of surging global gold prices. Other tailwinds are above normal monsoon, early arrival of the southwest monsoon, elevated reservoir level, favourable rainfall outlook, and softening food inflation. Crude prices are expected to remain volatile because of global demand, supply disruptions, and geopolitical tensions. CPI inflation softened to 3.2 % in April, the lowest since July 2019, from 3.3 % in March because of a sustained fall in food prices. CPI inflation is expected to remain range-bound, driven by factors such as food prices, fuel prices, and economic growth. With benign inflation (inflation remaining below the 4 % from February to April 2025) and plunging inflation, the CPI is likely to durably align with the 4 % target over 2 months, inducing the RBI to cut policy rates by 25 bps to 5.75 % in June. A downward bias in FY26 CPI inflation will be symptomatic of the depth of the rate-cutting cycle. CPI is expected to moderate from 4.9% in FY25 to 4.3% in FY26. However, inflationary risks persist because of global commodity prices and any escalation in geopolitical tensions. Under the flexible inflation targeting (FIT) framework, the RBI has been mandated by the government to maintain CPI at 4 % with a band of +/-2 %. Decelerating inflation and moderate growth warrant ' monetary policy to be growth supportive, while remaining watchful about the rapidly evolving global macroeconomic conditions ' (RBI's Annual Report for 2024-25). Revised GDP and inflation forecasts The RBI is likely to revise its projections on real GDP and inflation for FY26. Rate Action The RBI has already cut the Repo Rate twice in 2025- in February and in April, by 25 bps each. These cuts reduced the key lending rate to 6%. Further, the RBI also changed its stance from 'neutral' to 'accommodative' in April. Accordingly, most banks reduced their repo-linked lending rates. Lenders also lowered their marginal cost of funds-based lending rate (MCLR), with a beneficial impact on interest-rate sensitive segments, viz., real estate, small businesses, and home loans. A further 25-bps cut in the Repo Rate will drive economic traction, promote borrowing, investment, and growth, and enhance job creation by making it cheaper for people to borrow money. A 25-bps reduction in the Repo Rate will cause a corresponding drop in all external benchmark lending rates (EBLR), with equated monthly installments (EMIs) on home and personal loans decreasing by 25 bps. A boost in real estate will have a multiplier effect on the economy, particularly in sectors like cement, steel, and construction equipment. This would be the third consecutive reduction in the Repo rate since February 2025. Since inflation is within the RBI's target band, and given the likely growth-inflation dynamics, we expect another reduction of 50 bps in FY26. Policy Stance The MPC is likely to retain the 'accommodative' monetary policy stance adopted in April 2025. (The author is Chief Economist, Infomerics Valuation and Ratings) ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Khaleej Times
20-05-2025
- Business
- Khaleej Times
UAE economy resilient despite tapering fiscal surplus
The UAE faces a shifting economic landscape as lower oil prices are expected to reduce its fiscal surplus, yet the nation's economic outlook remains robust, buoyed by strategic diversification and increased oil production. According to a recent report from the National Bank of Kuwait (NBK), the UAE's fiscal surplus is projected to decline from an estimated 5.5 per cent of GDP in 2024 to four per cent over 2025-2026. Despite this, the country's GDP growth is forecasted to average 4.2 per cent during the same period, driven by higher oil output and sustained non-oil sector resilience. The International Monetary Fund (IMF) echoes this optimism in its latest Fiscal Monitor, highlighting the UAE's strong public finances. In 2024, the UAE achieved an overall budget surplus of 4.8 per cent of GDP, which accounts for all government expenditures, including debt interest payments. Looking ahead, the IMF projects a surplus of 2.9 per cent of GDP in 2025 and 2026, gradually rising to four per cent by 2030. This comprehensive fiscal reporting, which includes federal, local, and social security funds, underscores the UAE's prudent financial management. The IMF's World Economic Outlook, released days earlier, further supports this positive trajectory, forecasting real GDP growth of 4 per cent in 2025 and 5 per cent in 2026. However, external risks, such as lower oil prices and potential trade disruptions from US tariffs on iron, steel, and aluminum, could temper this growth. NBK notes that these factors may dampen investor sentiment and reduce the UAE's current account surplus to 2.3 per cent of GDP by 2026. Despite these challenges, the UAE's economy is underpinned by its ambitious diversification efforts and global competitiveness. NBK emphasises that government spending is set to rise by 3.6 per cent over 2025-2026, with increased allocations for infrastructure, social benefits, and initiatives to reduce reliance on hydrocarbons. 'The UAE's attractiveness to tourists, labor, capital, and businesses, supported by its investment and diversification agenda, provides underlying resilience,' the NBK report states. These efforts are critical as the non-oil sector, a key growth driver, may experience slower expansion due to elevated interest rates and increased property supply. The real estate market, a significant component of the non-oil economy, faces mixed dynamics. While anticipated interest rate cuts could bolster demand, higher supply and stricter regulations may limit sales and price growth over the next two years. This balancing act highlights the UAE's challenge in maintaining economic momentum amid global uncertainties. Daniel Richards, senior economist at Emirates NBD, notes that lower oil prices will impact budget balances across the GCC, including the UAE. 'We now forecast a surplus equivalent to 1.8 per cent of GDP in 2025, down from our previous projection of 2.7 per cent,' Richards explains. This represents a decline from the estimated 3.4 per cent surplus in 2024, though final figures for last year are still pending. The UAE's ability to navigate these headwinds lies in its proactive reforms and international appeal. Investments in technology, renewable energy, and tourism continue to diversify revenue streams, reducing dependence on volatile oil markets. Additionally, the country's strategic positioning as a global trade and finance hub enhances its economic stability. Economists argue that while lower oil prices pose challenges, the UAE's forward-thinking policies and robust fiscal framework position it to weather the storm. 'By prioritising diversification and maintaining a competitive edge, the UAE is poised to sustain growth and resilience, even as global economic uncertainties loom. As the nation balances increased spending with fiscal discipline, its economic outlook remains a beacon of stability in a turbulent global landscape.'
Indian Express
01-05-2025
- Business
- Indian Express
Top 10 countries with the highest debt-to-GDP in 2025: Where does India rank?
Debt to GDP Ratio by Country 2025: The International Monetary Fund's (IMF) recent projections indicate that global public debt could surpass levels from the COVID-19 pandemic era, which reached 98.9% of GDP in 2020. According to the Fiscal Monitor's debt-at-risk analysis, the worldwide public debt might exceed 117% of GDP by 2027, in the worst-case scenario, which could be the greatest level since WWII, surpassing reference predictions by nearly 20 percentage points. Furthermore, it forecasts the global public debt to reach nearly 100% (99.6%) of global GDP by the end of this decade (2030), a result of the ongoing economic and geopolitical uncertainties caused by the latest U.S. tariff declarations, which have contributed to the acceleration of debt levels. An outlook of global public debt, per cent of GDP, over the years. (Source: IMF) Where do China and India stand globally? China is ranked 21st and has a public debt ratio of 96%, which is comparatively lower than that of other developed nations. Meanwhile, India's debt-to-GDP ratio of 80% places it 31st globally; the central government of India is aiming for a decline in the debt-to-GDP ratio to 50±1 per cent by March 31, 2031. Top 10 countries with the highest debt-to-GDP ratio in 2025 Sudan, primarily due to prolonged conflict and significant economic challenges, surpassed Japan, having the highest debt-to-GDP ratio in the world, at 252%. Among developed and advanced economies, Japan has the highest debt-to-GDP ratio at 234.9%, exacerbated by ongoing fiscal deficits and an ageing population. The United States, the world's largest economy, ranks eighth globally with a high debt-to-GDP ratio of 123% in 2025. France follows closely at 9th with a public debt ratio of 116.3%, and Canada rounds up the top ten. A global outlook of general government gross debt in per cent of GDP, as of 2025. (Credit: IMF) Below are the top 10 countries with the highest public debt in 2025: Rank Country General government gross debt (% of GDP) 1 Sudan 252% 2 Japan 234.9% 3 Singapore 174.9% 4 Greece 142.2% 5 Bahrain 141.4% 6 Maldives 140.8% 7 Italy 137.3% 8 United States 122.5% 9 France 116.3% 10 Canada 112.5% Source: IMF – World Economic Forum (April 2025) Note: Gross debt consists of all liabilities that require payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future. This includes debt liabilities in the form of SDRs, currency and deposits, debt securities, loans, insurance, pensions and standardised guarantee schemes, and other accounts payable. Thus, all liabilities in the GFSM 2001 system are debt, except for equity and investment fund shares and financial derivatives and employee stock options. Debt can be valued at current market, nominal, or face value (As noted on the IMF).
