Economy

The State of the Global Economy
IMF Warning: Debt at Highest Level Since World War II – Time to Act

Global sovereign debt is at its highest level since World War II, and wealthy nations must act now—before borrowing costs rise even further. This is the assessment of Era Dabla-Norris, Deputy Director of the IMF’s Fiscal Affairs Department, speaking to AFP during the fund’s ongoing annual meeting in Bangkok.

Yields on government bonds have risen in the wake of the war in Iran. In the United States, the government’s borrowing costs are now at their highest level in approximately 24 years.

Government borrowing costs are expected to increase sharply through 2031, which will leave less funding available for areas such as defense and social welfare.

Consequently, governments will have “significantly less room for maneuver” within their budgets, says Dabla-Norris.

Meanwhile, IMF Managing Director Kristalina Georgieva warns that economic growth alone is insufficient to resolve debt issues; countries must also reduce their budget deficits.

The ECB vs. inflation
ECB President Lagarde may leave early

The World Economic Forum may appoint the current President of the European Central Bank, Christine Lagarde, as its new chair as early as November, according to information obtained by Reuters.

This would mean Lagarde stepping down from her position as ECB President ahead of schedule, as her term is not set to expire until October 2027. Such a move would provide EU leaders with the opportunity to select a new ECB President before the French presidential election in the spring. An election in which, according to opinion polls, the far-right is well-positioned to secure victory.

EU Budget
Kristersson: An increase of 60 percent for the EU is completely out of the question

EU member states remain far apart ahead of tomorrow’s meeting, where the union’s long-term budget is set to be discussed, reports TT. A compromise proposal put forward by Ireland would reduce financial commitments by 108 billion euros—to 1,622 billion euros over the seven-year budget period—compared to the original proposal.

The government estimates that this would increase Sweden’s EU contribution by 60 percent.

“That is completely and utterly out of the question,” says Ulf Kristersson (Moderate Party), Prime Minister in the caretaker government.

Switzerland: The Rolex and the gold were for the US—not Trump

The engraved gold bar and a Rolex desk clock were intended for the American people, not for President Donald Trump. This is according to Swiss State Secretary Helene Budliger Artieda, following allegations that the gift constituted bribery.

“It is a gift to the American people. It has been duly registered at the White House, and if everything goes as planned, it will end up in a presidential library,” she says.

The gift came from a group of Swiss companies and was presented in the Oval Office by a Swiss delegation last November. It has since become the subject of political controversy.