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IMF Pins Global Growth Hopes on India

As China lags due to its real estate sector downturn and US sanctions causing economic strain, the IMF report highlights India and other G20 emerging markets like Brazil poised to lead global growth and trade…reports Asian Lite News

Multilateral institutions such as the IMF and UNCTAD view India as a potential driver of global economic growth going ahead, as the country has become the fastest-growing emerging economy while China’s GDP growth has been pegged at 4.6 per cent in 2024 and expected to slow down further to 4.1 per cent in 2025.

The IMF’s World Economic Outlook report, released on Tuesday, has not only raised India’s growth forecast by 0.3 percentage points to 6.8 per cent for 2024-25 but also sees the country as a bright spot “supporting global growth over the medium term and spill over to other countries”.

With China having fallen behind after the crash in its real estate sector and US sanctions triggering an economic slowdown, the IMF report views India and other G20 large emerging market countries such as Brazil playing a bigger role in the global trading system and pushing global growth going ahead.

The IMF report also vindicates India’s economic policy as it attributes the robust growth rate to a “strong domestic demand”, which has been created by a huge increase in government expenditure on large infrastructure projects such as highways, railways, ports and power plants along with a revival in rural demand.

Stepped-up allocations for agriculture, rural employment schemes such as MNREGA and special programmes for women self-help groups have helped to bolster rural demand and create a larger market for industrial products.

During the 10-year tenure of Prime Minister Narendra Modi’s government, over 90,000 kilometres of national highways have been built which is almost twice that constructed in the preceding 10 years, according to official figures.

Government investment in highway infrastructure shot up more than four-fold to a staggering Rs 2.4 lakh crore in 2022-23 from Rs 51,000 crore in 2013-14.

The latest UNCTAD (UN Conference on Trade and Development) report, released on Tuesday, forecasts global economic growth at 2.6 per cent in 2024, barely above the 2.5 per cent threshold commonly associated with a recessionary phase.

However, amid the gloomy global scenario, it states that India’s economy is buoyed by strong public investment and service sector growth, with a forecasted expansion of 6.5 per cent in 2024.

India is expected to maintain its rapid pace of road construction with the addition of up to 13,000 kilometres in 2024-25, an increase of 5 to 8 per cent over the previous year, according to a report released by rating agency ICRA on Tuesday.

“The pace of execution in this fiscal will be supported by a healthy pipeline of projects at above 45,000 km as of March 2024, increased capital outlay by the government and focus on completion of projects by the Ministry of Road Transport and Highways, ” the report states.

Government investments in big infrastructure projects create more jobs and incomes that have a multiplier effect on the economy as demand for products such as steel and cement also goes up, which leads to more private investments and employment. With the creation of more jobs demand for consumer goods also increases leading to a further acceleration in the country’s economic growth rate.

To ramp up the virtuous cycle of investment and job creation, the budget for 2023-24 sharply increased the capital expenditure outlay on infrastructure projects by 37.4 per cent to a whopping Rs 10 lakh crore from Rs 7.28 lakh crore in 2022-23.

The interim budget, presented by Finance Minister Nirmala Sitharaman in February has gone in for another 11.1 per cent increase in the outlay for infrastructure projects to Rs 11.11 lakh crore to spur growth. The increase that comes on top of a large base of the previous year will result in massive investments to spur growth. The Finance Minister pointed out that this will also attract big investments from the private sector which will add to the growth momentum.

Since the government has cut the fiscal deficit, it will need to borrow less which will leave banks more funds to finance the investments of private sector companies to accelerate growth and create more jobs.

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IMF Bullish on India

India remains the top performer among large economies this year, and the next, with China following at 4.6 pc in 2024 and 4.1 pc in 2025…reports Asian Lite News

The International Monetary Fund (IMF) has pegged India’s growth projection to 6.8 pc this year, an increase of 0.3 pc over its January 2024 update.

The IMF in its World Economic Outlook (WEO), released on Tuesday, said growth in India is projected to remain strong at 6.8 per cent in 2024 and 6.5 per cent in 2025.

The robustness reflects continuing strength in domestic demand and a rising working-age population, it added.

In its January 2024 update to WEO released in October, the IMF had projected the Indian Economy to grow at 6.5 per cent each in 2024 and 2025.

India remains the top performer among large economies this year, and the next, with China following at 4.6 pc in 2024 and 4.1 pc in 2025.

Growth of Global Output is expected to maintain a steady rate of 3.2 per cent this year, as well as in 2025, the pace it grew at in 2023.

“The global economy remains remarkably resilient, with growth holding steady as inflation returns to target,” the IMF observed.

Despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops, the WEO added.

Futures markets suggest that oil prices will slide by 2.5 per cent year over year to average $78.60 per barrel in 2024 and will continue to fall to $67.50 in 2029, the IMF said, commenting on crude prices. It sees the risks to this price outlook as “balanced”.

“Upside price risks could arise from an escalation of the Middle East conflict and attacks on Russian oil infrastructure. Downside risks could arise from a slowdown in Chinese oil demand and strong non-OPEC supply growth, possibly coupled with a rise in OPEC+ oil supply to regain market share,” the IMF added.

Meanwhile, the latest UN Conference on Trade and Development (UNCTAD) report released on Tuesday forecasts global economic growth at 2.6 per cent in 2024 barely above the 2.5 per cent threshold commonly associated with a recessionary phase.

However, amid the gloomy global scenario, it states that India’s economy is buoyed by strong public investment and service sector growth, with a forecasted expansion of 6.5 per cent in 2024.

The report states that in Europe, countries like Germany and Italy are struggling with weak economic activity and facing industrial slowdowns and fiscal constraints, impacting their growth projections.

As far as the Americas are concerned, growth is expected to slow, with Argentina facing severe inflation, and Brazil’s economic momentum dampened by external pressures and reliance on commodities. North America remains relatively resilient, though challenges continue.

Africa is projected to grow at 3.0 per cent in 2024, up slightly from 2.9 per cent in 2023. Armed conflicts and climate impacts pose significant challenges in several countries.

Meanwhile, the continent’s largest economies – Nigeria, Egypt and South Africa – are underperforming, affecting overall prospects.

Growth in the Oceania region, particularly in Australia, is expected to remain subdued, with the low-growth period extending into 2024.

The report also observes that in 2023, global merchandise trade fell by about 1 per cent in real terms, marking a significant divergence from overall economic growth.

The contraction was partly due to trade tensions among some large economies and subdued global demand.

Over the last six months, disruptions in key shipping routes, such as the severe drought affecting the Panama Canal and attacks on vessels in the Red Sea, have strained merchandise trade further and significantly increased shipping costs, the report points out.

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UAE to participate in 2024 Spring Meetings of IMF, World Bank Group

The Spring Meetings of the International Monetary Fund and the World Bank Group will bring together central bankers, ministers of finance and development…reports Asian Lite News

The United Arab Emirates, represented by the Ministry of Finance, announced its participation in the 2024 Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) taking place in Washington DC, from 15th to 20th April 2024.

Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs, will head the UAE delegation, which includes Ali Abdullah Sharafi, Acting Assistant Undersecretary for International Financial Relations, Hamad Essa Al Zaabi, Director of the Office of Minister of State for Financial Affairs, Thuraiya Hamid Alhashmi, Director of International Financial Relations and Organisations at the Ministry of Finance, and several specialists from the Ministry of Finance and the Central Bank of the UAE.

On the sidelines of the Spring Meetings, Mohamed Al Hussaini will participate in the second G20 Finance Ministers and Central Bank Governors (FMCBG) Meeting led under the Brazilian presidency for the year 2024, and will deliver a keynote at the International Monetary and Financial Committee (IMFC) plenary, and chair the joint WBG-IMF Development Committee plenary.

The Minister will also meet with the IMF Managing Director Kristalina Georgieva and other participating finance ministers, central bank governors, and heads of regional financial institutions of the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region.

On the UAE’s participation in the upcoming Spring Meetings, Mohamed bin Hadi Al Hussaini emphasised the importance of further global collaboration to establish effective and sustainable solutions for all developmental needs. He also emphasised the critical role of the Spring Meetings of the IMF and WBG as a platform to facilitate extensive dialogue among a wide range of key stakeholders.

He said, “The UAE Ministry of Finance will aim to advance discussions on macroeconomic stability and debt sustainability, as well as address the ripple effects of geopolitical challenges on global trade and medium-term growth prospects. In the context of the current landscape, it will be vital to strengthen multilateral efforts to accelerate sustainable development and push the world towards an inclusive and resilient path.”

The Spring Meetings of the International Monetary Fund and the World Bank Group will bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organisations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.

The meetings will also feature seminars, regional briefings, press conferences, and other events focused on the global economy, international development, and the world’s financial system.

The main ministerial meetings and events will take place between 17th and 19th of April, with other sideline events and activities taking place during the week between 15th and 20th of April. (ANI/WAM)

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Kristalina Georgieva To Serve As IMF Chief For Second Term

The IMF Board commended Georgieva’s “strong and agile leadership during her term, navigating a series of major global shocks.”

The Executive Board of the International Monetary Fund (IMF) on Friday selected Kristalina Georgieva to serve as IMF Managing Director for a second five-year term starting on October 1, 2024.

The board’s decision was taken by consensus, according to a statement by the coordinators of the Executive Board, Afonso S. Bevilaqua and Abdullah F. BinZarah.

The decision was made nearly a week after the coordinators announced that Georgieva, the IMF’s current Managing Director, is the only candidate for the position, Xinhua news agency reported.

“In taking this decision, the Board commended Georgieva’s strong and agile leadership during her term, navigating a series of major global shocks,” the statement said.

Georgieva led the IMF’s unprecedented response to these shocks, including the approval of more than $360 billion in new financing since the start of the pandemic for 97 countries, debt service relief to the Fund’s poorest, most vulnerable members, and a historic Special Drawing Rights (SDR) allocation equivalent to $650 billion, the statement noted.

Under her leadership, the Fund introduced innovative new financing facilities, including the Resilience and Sustainability Facility and the Food Shock Window.

It also secured a 50 per cent quota increase to bolster the Fund’s permanent resources and agreed to add a third Sub-Saharan African chair to the IMF Board.

“Looking ahead, the Board welcomes Georgieva’s ongoing emphasis on issues of macroeconomic and financial stability, while also ensuring that the Fund continues to adapt and evolve to meet the needs of its entire membership,” the statement said.

Georgieva, a national of Bulgaria, has been the IMF’s Managing Director since October 1, 2019.

Before joining the Fund, Georgieva was Chief Executive Officer of the World Bank from January 2017 to September 2019, during which time she also served as interim President of the World Bank Group for three months.

She previously served at the European Commission as Commissioner for International Cooperation, Humanitarian Aid and Crisis Response, and as Vice-President for Budget and Human Resources.

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Imran Khan Faces IMF Snub

In another setback to Imran Khan, IMF refuses to interfere in Pakistan’s electoral dispute, reports Asian Lite News

The International Monetary Fund (IMF) has refused to interfere in Pakistan’s domestic policies after Imran Khan-founded Pakistan Tehreek-e-Insaf demanded it review the country’s February 8 polls before sanctioning any new economic package, the Express Tribune reported.

However, the IMF has encouraged Islamabad to hold ‘fair resolution’ of all electoral disputes.

This comes after incarcerated former PM Imran Khan penned a letter to the IMF, urging the global lender to give the poll results a thorough once-over before cutting any new cheques for Islamabad.

“If the country gets a loan in such a situation, then who will return it?” he questioned, expressing concerns that such a loan could lead to an increase in poverty.

Khan warned that without substantial investment in the country, the burden of loans would continue to rise, underscoring the need for political stability.

While breaking its silence on the PTI’s attempt to involve the global lender in political matters, an IMF spokesperson instead showed readiness to negotiate the next medium-term programme with the newly-elected government.

“The IMF, as an international institution with a narrow mandate on economic issues, does not comment on domestic political developments,” said the IMF spokesperson while commenting on the letter written by the PTI.

The IMF said that it received a letter from a PTI spokesperson on February 28 regarding the Fund’s engagement with Pakistan under the programme, as reported by Express Tribune.

Notably, PTI has throughout termed the Feb 8 polls as ‘disputed’ while alleging a lack of ‘level playing field’. The party claims to have won about 177 seats as against 92, which were notified by the Election Commission of Pakistan (ECP) as independently elected members of the National Assembly. The PTI has also claimed to have documentary evidence of rigging in the elections and demanded that the IMF should play a role in conducting the investigations.

“Given the importance of the institutional environment for economic stability and growth, we do encourage the fair and peaceful resolution of all electoral disputes,” said the IMF spokesperson.

The IMF’s current USD 3 billion short-term bailout package is expiring before the middle of next month and Prime Minister Shehbaz Sharif has already given a go-ahead to the Finance Ministry to begin discussions for signing a new Extended Fund Facility (EFF).

The last EFF had expired in June without the disbursement of the USD 2.6 billion loan amount due to Pakistan’s failure to meet the programme conditions.

The last loan tranche of $1.2 billion of the current programme remains undisbursed and the IMF is waiting for the formation of the federal cabinet before sending a mission to Pakistan.

“We look forward to engaging with the new government to complete the second review under the current Stand-by Arrangement and, should the government request, support the formulation of a new medium-term economic programme,” according to the IMF spokesperson.

The spokesperson said that the IMF’s aim is to support the implementation of strong policies to deepen financial stability, address long-standing economic and underlying balance of payments challenges, and restore sustained and inclusive growth for the benefit of all Pakistani citizens, Express Tribune reported. (ANI)

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Imran Seeks IMF Election Audit Before New Loan

Pakistani Prime Minister Imran Khan.(photo:instagram)

Former PM Imran Khan warned that the loan would lead to more poverty and add to the country’s burden.

Pakistan Tehreek-e-Insaf (PTI) founder and former Prime Minister, Imran Khan, confirmed on Friday that he had sent a letter to the International Monetary Fund (IMF) demanding that it hold an audit of the election results before approving any new loan for Islamabad, The News International reported.

“The letter has been written to the IMF and will be dispatched today. If the country gets a loan in such a situation, then who will return it?” PTI leader told media during a hearing of the £190 million reference at Adiala Jail.

The former PM warned that the loan would lead to more poverty and add to the country’s burden.

According to the News International report, Khan’s update about the letter comes a day after PTI senator Ali Zafar announced that the party founder had decided to write to the global lender urging it to call for an audit of the February 8 election before it continues talks with Islamabad for a new loan programme.

However, the IMF, on Saturday, expressed willingness to work with the new Pakistani government, ignoring his demand, the news report stated.

Meanwhile, former Finance Minister Ishaq Dar said the letter holds no significance, adding that if the PTI founder has written against the country’s national interest then it is condemnable.

“Writing anything for personal gain is shameful. PTI founder’s letter will have no significance,” Dar, a senior leader of the Pakistan Muslim League-Nawaz (PML-N), told media outside the Punjab Assembly.

Pakistan’s former Finance Minister Ishaq Dar

Pakistan secured a short-term USD 3 billion programme from the IMF last year which helped to avert a sovereign debt default. It will run out next month and securing a new and much bigger one is widely seen as the priority for the new administration, Geo News reported.

With the Pakistan Muslim League-Nawaz (PML-N), the Pakistan Peoples Party (PPP), and their allies striking a deal to form a coalition government, the PTI and some other political parties have altogether rejected the elections and announced country-wide protests.

The PTI has demanded election results be issued based on Form 45–the results of a single polling station instead of Form 47–the consolidated results of a constituency, as the party claimed the votes were rigged after its Independent candidates won a simple majority in the National Assembly. (ANI)

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Mohammed bin Rashid meets with IMF Managing Director

The meeting discussed various global economic issues, the strong relations between the UAE and IMF…reports Asian Lite News

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, today met with Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), ahead of the World Governments Summit 2024 (WGS), which kicks of tomorrow (Monday), in Dubai under the theme “Shaping Future Governments”.

The meeting was held in the presence of H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council, and H.H. Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler, and Deputy Prime Minister and Minister of Finance.

Also in attendance were H.H. Sheikh Ahmed bin Mohammed bin Rashid Al Maktoum, Second Deputy Ruler of Dubai; H.H. Sheikh Ahmed bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority, Chairman of Dubai Airports, and Chairman and Chief Executive of Emirates Airline and Group; H.H. Sheikh Mansoor bin Mohammed bin Rashid Al Maktoum, Chairman of the Dubai Ports and Borders Security Council; Mohammad bin Abdullah Al Gergawi, Minister of Cabinet Affairs, and Chairman of the World Governments Summit; and Mattar Al Tayer, Commissioner General for Infrastructure, Urban Planning and Well-Being Pillar, Director-General and Chairman of the Board of Executive Directors of the Dubai Roads and Transport Authority.

The meeting discussed various global economic issues, the strong relations between the UAE and IMF and the key role of the UAE’s booming economy in offering an optimal environment for global businesses to thrive.

During the meeting, His Highness Sheikh Mohammed highlighted the role of the WGS in anticipating future trends in governance and supporting efforts aimed at bolstering a sustainable global economy.

His Highness said, “Through the participation of numerous high-level officials, expert forecasters, decision-makers, thought leaders and international organisations, the outcomes of the Summit serve to actively foster collaborative partnerships among nations worldwide. Such efforts play a crucial role in advancing continuous prosperity across the globe.”

Kristalina Georgieva highlighted the UAE’s strong economic performance over the last few years. She noted that the WGS serves as a platform that promotes constructive dialogue and facilitates the exchange of knowledge and expertise among decision-makers, international experts and specialists from diverse fields.

She further emphasised that the Summit serves as a platform for generating innovative solutions that collectively address global challenges and contribute to shaping a brighter future for humanity. The Managing Director of IMF also highlighted the organisation’s robust relationship with the UAE.

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Reform IMF, WB with BRICS Involvement, UN Chief Bats for Global South

Guterres emphasised BRICS’ vital role for developing nations but warns against fracturing the global economy….reports Arul Louis

The international financial and development institutions should be reformed to reflect the interests of the Global South, Secretary-General Antonio Guterres has said.

While the BRICS can play an important and complementary role for developing nations, he stressed that it should not contribute to a fragmentation of the world economy.

The international financial institutions — the International Monetary Fund and the World Bank — and the Security Council that were created in the 1940s after World War II reflect “what the power relations and the global economy were at that time” but aren’t relevant to today’s world, he said at a news conference here on Thursday.

Since they don’t “correspond to the power relations and to the global economy as it is today”, he said, “it will be very important for those institutions to reform in order to represent today’s global economy, to be truly universal and truly inclusive”.

Modi’s participation at BRICS summit showcases India’s Strategic Autonomy doctrine.(photo:IN)

“We obviously need that those institutions reflect more obviously the interests of the Global South”, he emphasised.

Asked about the role of BRICS, he said that “it is important to have a multiplicity of different organisations to support developing countries” in the finance and trade sectors.

“But”, he added, “it is essential that (it) doesn’t correspond to a fragmentation of the global economy”.

“One of the most important aspects that we need to preserve today is One Global Economy, One Global Market, One Global Internet and to avoid the fragmentation of that global economy”, he said.

“Within a united global economy, I think that many of these institutions (like BRICS) can play an extremely important and complementary role”, he added.

BRICS, made up originally of emerging economies Brazil, Russia, India, China and South Africa, has expanded to include Ethiopia, Egypt, Iran, Saudi Arabia and the United Arab Emirates with membership queries from 34 countries pending.

The group, which aims to foster trade and financial cooperation has created the New Development Bank to fund development projects and help financial stabilisation in the member countries, functioning in some ways like the established financial institutions.

About the fitness of the Bretonwoods Institutions — as the World Bank and the International Monetary Fund are known for the venue of their founding — to meet contemporary needs, Guterres said that besides the unrepresentative character of their power structure and orientation, they are undercapitalized and too small for the current global needs.

“The truth is that they became too small”, he said, pointing out that “the paid-in capital of the World Bank as a percentage of global GDP today is less than one-fifth of what it was in 1960”.

“So we obviously need a meaningful capitalisation of those institutions”, he said.

While the UN cannot reform them, Guterres said that he would like to see the United Nations Summit of the Future in September give some directions for the way those institutions “should structurally move”.

Assessing the global political situation, Guterres said, “We are no longer in a bipolar or unipolar world, as I said, we are in a kind of on the way to a multipolar world, but in a very chaotic situation”.

“Power relations became unclear and what we see today in the world is political actors doing whatever they want and with total impunity”, he said.

To end the multitude of conflicts and divisions and to effectively address threats posed by Artificial Intelligence, to act on climate action and to achieve the Sustainable Development Goals, “a serious conversation between developed and developing countries; between rich and emerging economies; between north and south, east and west” is needed, he said.

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Unpacking the Challenges for Pakistan’s Next Government

It is an established fact that addressing structural weaknesses has been one of the most ignored issues by political governments in the past, which has pushed the country in a state of virtual financial meltdown…reports Asian Lite News

Pakistan is a country hit with severe levels of inflation and poverty due to the recent policy decisions undertaken by the government to meet the demands of the International Monetary Fund (IMF).

When the inflation hit and poverty stricken voters make way to the polling stations on 8th February 2024, after hearing promises and tall claims of contesting parties for over a month of election campaigns and public gatherings, expectations from the winning party would be very high and may just become a sore disappointment in the coming days.

This is because the lofty claims of better days of politicians may just be put to rest in front of the standing economic and financial challenges confronting the new government from day one.

It would certainly not be a bed of roses for any political party or a government formed through coalition as Pakistan’s economic scene has been bruised by political incompetence, misadventures and missteps from the past decades of failed governance and management.

It would not be wrong to say that getting the country out of the economic crisis would be a long and tedious process, that also if the next government decides to take difficult decisions and work for that goal and also if the voters are willing to survive more shocks for better days.

The current rate of inflation in Pakistan is hovering around 30 per cent while the ones living below the poverty line are consistently rising with every passing day. As per estimates, about 38.2 per cent of the total population of the country (242 million) is estimated to be below the poverty line and the percentage continues to rise with ever-increasing rates of electricity, gas, fuel and other essentials.

It is an established fact that addressing structural weaknesses has been one of the most ignored issues by political governments in the past, which has pushed the country in a state of virtual financial meltdown.

And even though the politicians know these realities; they continue to make lofty promises and claims to attract their voters and come into power. From promising lower bills, cheaper groceries and better days to immediate relief to the common people – statements of politicians continue to become more and more irresponsible and far away from reality.

It is another known fact that the IMF has put a stop to freebies for the government and public expense. Yet, the leading parties continue promising free electricity and gas, a promise completely opposite to the state of the national economy.

The new government will have to immediately start working and finalize another long-term bailout package with the International Monetary Fund (IMF) through deeper and broader reforms.

“The new regime’s diplomatic and economic policy capabilities will also be tested almost immediately, as the new administration performs a balancing act between the IMF for multilateral support and relationships at the personal and state-level with the Chinese leadership, which now stands as Pakistan’s biggest creditor,” said senior economist Khaleeq Kiani.

He said that while the IMF-led lenders had been insisting on renegotiation of electricity contracts with China, as Pakistan did with other local and international investors, at least three previous requests for an extension in the debt repayment period for Chinese power producers had been given the cold shoulder.

While things do not look rosy at all for any upcoming government, the polls would resolve the political instability in the country and give way to work up economic reform on a long-term basis through an elected government.

ALSO READ-Pakistan’s Election Focus: Domestic Priorities Overshadow Foreign Relations

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IMF warns Hunt against tax cuts

The IMF said it was forecasting UK growth of 0.5% in 2023 and 0.6% in 2024 – both unchanged from October – and with only Germany of the leading G7 industrialised economies expanding more weakly…reports Asian Lite News

The International Monetary Fund has issued a strong warning to Jeremy Hunt against cutting taxes in his budget in March, stressing the need to boost key areas of public spending instead.

In updated forecasts for the UK and the rest of the global economy, the Washington-based fund doubted whether the widely anticipated tax cuts would be possible without extra borrowing or post-election spending cuts.

The IMF said the chancellor should be focusing on repairing the public finances after the damage caused by the pandemic and the war in Ukraine in order to meet growing spending pressures.

An IMF spokesperson said: “Preserving high-quality public services and undertaking critical public investments to boost growth and achieve the net zero targets, will imply higher spending needs over the medium term than are currently reflected in the government’s budget plans.

“Accommodating these needs, while assuredly stabilising the debt/GDP ratio, will already require generating additional high-quality fiscal savings, including on the tax side.”

Hunt is expected to cut income tax in the budget, but the IMF called on the chancellor to increase carbon and property taxes, take steps to eliminate loopholes in the taxation of wealth and income, and overhaul the pensions triple lock. “It is in this context that [IMF] staff advises against further tax cuts,” the IMF said.

Hunt rejected the IMF’s call. “The IMF expect growth to strengthen over the next few years, supported by our introduction of the biggest capital investment tax reliefs anywhere in the world, alongside national insurance cuts to improve work incentives,” the chancellor said.

“It is too early to know whether further reductions in tax will be affordable in the budget, but we continue to believe that smart tax reductions can make a big difference in boosting growth.”

The IMF said it was forecasting UK growth of 0.5% in 2023 and 0.6% in 2024 – both unchanged from October – and with only Germany of the leading G7 industrialised economies expanding more weakly.

With lower inflation likely to boost consumer spending power, the IMF said it was pencilling in UK growth of 1.6% in 2025 – slower than forecast three months ago. “The markdown to growth in 2025 of 0.4 percentage points reflects reduced scope for growth to catch up in light of recent upward statistical revisions to the level of output through the pandemic period,” the IMF said.

Last year, the Office for National Statistics revised up its estimates of UK growth in 2020 and 2021 by 1.8 points in total across the two years.

The IMF said the global economy was gliding towards a “soft landing” after coping with the impact of tough central bank interest-rate action to reduce inflation.

Revising up its growth estimates for 2024, the IMF said a number of big economies – including the US, China, Russia and India – had posted stronger than expected performances in 2023 and it was surprised by the resilience shown.

ALSO READ-IMF upgrades 2024 global growth forecast to 3.1%