The International Monetary Fund has warned that rising government debt and global energy shocks could strain public finances, urging countries to avoid broad fuel subsidies.
According to Reuters, in its latest Fiscal Monitor report, the IMF said the war in the Middle East has pushed up energy prices and increased pressure on already fragile economies.
Rodrigo Valdes, the IMF’s fiscal affairs chief, told Reuters that governments should instead focus on targeted support.
“We don’t have oil. We don’t have energy. Energy needs to be more expensive for everybody, so that the adjustment happens and we consume less,” Valdes said.
He added that subsidies could worsen global price pressures by masking real costs.
“You can pass through (higher energy prices) and then you can do other things to help,” he said. “It’s a global shock and if countries suppress the price signal, the global price will be higher … It’s very important to give price signals so demand can adjust.”
The IMF said global public debt reached 93.9 percent of GDP in 2025 and is expected to hit 100 percent by 2029, earlier than previously forecast.
It warned this would be the highest level since the aftermath of the World War II.
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