The International Monetary Fund (IMF) released its latest Fiscal Monitor Report on the 15th, stating that against the backdrop of strained public finances in many countries, it is advising governments to cautiously adjust fiscal policies. The recommendation is to provide assistance to the public while ensuring the basic functioning of public finances is maintained, in order to mitigate the impact of the Middle East conflict on the global economy.

The report indicates that the global public debt situation shows no substantial improvement by 2025, and on this basis, the Middle East conflict has become a new source of fiscal pressure. The fiscal impacts of the conflict are highly asymmetric, with energy-importing countries, particularly low-income developing nations, facing the greatest strain.

The report argues that, given diminished fiscal buffers, policies addressing rising energy costs should be precisely calibrated. They should be targeted to assist the groups and businesses most vulnerable to price increases and least able to absorb these shocks, while remaining consistent with monetary policies aimed at controlling inflation. The report suggests that national fiscal policies should be more forward-looking and structurally sound.

The report further states that the ratio of global public debt to global Gross Domestic Product (GDP) is projected to rise to nearly 94% in 2025 and is expected to reach 100% by 2029. The Middle East conflict, by causing increases in food and energy prices, tightening financial conditions, reducing economic activity, and raising defense expenditures, could place additional pressure on government fiscal situations.