The International Monetary Fund sees the world needing public investment of more than $20 trillion in the next two decades as nations spend on initiatives including improved healthcare systems, infrastructure and green technology.
Low interest rates present an opportunity for public investment to boost growth, modernizing aging airports, ports and rails in advanced economies, the IMF said in the second chapter of its semi-annual fiscal monitor published Wednesday. The resulting value of assets probably will exceed their liabilities and improve the public sector’s net worth, the fund said.
In countries where fiscal space is limited, it may be more appropriate to refocus spending on investment in healthcare systems, infrastructure and people, the IMF said. In emerging and developing economies, high debt levels and rising interest costs mean spending needs to happen in a fiscally responsible way, the fund said. It highlighted the need to improve management of projects, saying that globally one third of funds for public infrastructure are lost to inefficiencies.
The IMF urged countries to plan now for investment projects that can be implemented when the pandemic abates and measures that can be deployed quickly to help their citizens, citing slow fiscal support during previous economic slowdowns. The fund also encouraged nations to enhance unemployment benefits and social safety nets.
