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The International Monetary Fund (IMF) has warned that the dynamics of public debt in Europe risk getting out of control if governments do not immediately take significant measures to stabilize public finances.
In a study published on Monday, IMF economists emphasize that the current approach of many European countries is no longer sufficient in the face of increasing fiscal pressures.
According to the report, population aging, energy transition, increased defense spending, and low economic growth rates are exerting strong pressure on the budgets of European countries.
The study, signed by economists Luc Eyraud, Mahika Gandhi, Andrew Hodge, Giacomo Magistretti, Ian Stewart, Mengxue Wang and Jiae Yu, warns that, if these challenges are not addressed in time, the public debt of many countries could follow an "explosive" trajectory.
" If long-term spending pressures remain unaddressed, debt dynamics could enter an explosive trajectory in many European countries. Small interventions are insufficient given the magnitude of the adjustments needed and could even lead to reform fatigue ," the IMF study said.
The IMF calls on European governments to undertake deep fiscal reforms to guarantee the sustainability of public finances and avoid uncontrolled debt growth in the coming years.
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