# IMF urges governments to cut costly subsidies > IMF warns high debt and spending pressures require governments to cut subsidies. - Title: IMF urges governments to cut costly subsidies · Malay Mail - Summary: IMF warns high debt and spending pressures require governments to cut subsidies. IMF says high debt levels and rising interest rates mean governments must… - Keywords: imf, debt, spending, subsidies, fiscal deficits, interest rates, governments, global economy, news, world, urges, cut - Source: Malay Mail — https://malaymail.com/news/money/2026/10/17/imf-urges-govts-to-rein-in-costly-subsidies-as-debt-and-spending-pressures-mount/239457 - Published: 2026-10-17T14:23:09+00:00 - Read time: 1 min - Topics: imf, debt, spending, subsidies, fiscal deficits, interest rates, governments, global economy, news, world ## IMF warns on fiscal pressures IMF official says high debt levels and rising interest rates create mounting fiscal challenges for governments worldwide. > It’s a reality that debt is high. The debt-to-gdp ratio is increasing for the world economy. We have higher interest rates than a few years ago, and there are a lot of demand for more spending ## Global debt projected to exceed 100% of GDP New IMF research shows global public debt is expected to surpass 100% of global GDP before 2030, increasing fiscal pressures. ## Rising interest rates worsen debt scenario Higher interest rates increase the cost of carrying debt, making it harder for governments to stabilize fiscal positions globally. > Higher interest means that the cost of carrying debt is higher and therefore is a global phenomenon that implies that we need more efforts ## Defense spending adds to fiscal pressures New defense spending in Europe and increased US spending contribute to rising fiscal demands across economies. > I would say new defense spending in some countries, particularly in europe, but also some demand for more spending in the us ## Healthcare and pensions rise with aging populations Population aging drives up healthcare and pension costs, adding to fiscal pressures as climate change creates additional investment needs. > We have many sources of more spending pressures ## Low-income countries face oil price shocks Low-income countries must prepare for oil price shocks and extreme weather events that could worsen food insecurity. > They have to prepare for that ## Subsidies cost governments 0.5% of GDP Governments have provided subsidies or tax cuts equivalent to about 0.5% of GDP to contain oil prices, though figures vary widely. > governments worldwide have so far provided subsidies or tax cuts equivalent to an average of around 0.5 per cent of gdp ## Preventing price adjustments risks higher costs If governments block oil price increases from reaching consumers, costs could rise by 1-1.5% of GDP, affecting global prices. > if prices in some parts of the world do not adjust that means that consumption doesn’t adjust ## IMF urges targeted subsidy reforms IMF recommends moving from inefficient subsidies to targeted, temporary, and transparent measures to stabilize debt and fiscal deficits. > such policies also have significant spillover effects, valdes said underscoring the need to move away from inefficient and costly interventions toward measures that are targeted temporary and transparent ## Key takeaway IMF says high debt levels and rising interest rates mean governments must reduce subsidies to avoid worsening fiscal deficits.