Wonkmonk, an economic policy activist, shared an article on the IMF’s call to developed economies to increase public investment to enable a strong economic recovery from the Covid pandemic. The IMF noted that advanced economies should not worry about public debt but rather take advantage of low borrowing costs to increase spending particularly on infrastructure.
The IMF’s comments are in stark contrast to its usual concerns with public debt in rich countries although the organisation cautioned that the public investments should be made in such as way that it does not affect the debt dynamics. The IMF noted that increasing public investment by 1% could increase GDP by 2% in two years and generate millions of jobs.
Several countries have already pledged to increase public investment including the UK, which plans to increase spending by 1% of national income. The IMF also cautioned that developing and poor countries should be wary of spending as they do not have access to finance. These countries should focus on efficient public investment management to ensure money is spent effectively.