Cyprus, Greece, Italy and Japan have no so-called fiscal space to accommodate their public debt, the International Monetary Fund said in a report Tuesday. Fiscal space is defined as the difference between the debt limit and the current debt-to-GDP ratio. A Moody’s Analytics table based on May 2014 estimates shows Italy among “high-risk countries” because of a lack of fiscal space, as against Norway’s 246 percentage points of fiscal space.
The economic crisis has driven public debt of advanced economies to its highest peaks in the past 40 years, an International Monetary Fund (IMF) study showed Tuesday. The debt increase came as primary surpluses turned into deficits and growth slowed down. Advanced economies had average surpluses of 2.1% in 2008, which turned into average deficits of 4.4% in 2009. “Projections suggest advanced economies will have recovered barely half of their pre-crisis rates of growth by 2017,” the study said.