Governments should continue to help the most vulnerable during this crisis caused by COVID-19, but faced with greater pressure on their limited resources, they should consider increasing taxes on the wealthiest families and companies, the International Monetary Fund recommended on Wednesday.
The IMF also called to stop protecting “old jobs” and boost public investment in infrastructure and green energy, taking advantage of this moment “to move away from the pre-crisis growth model and accelerate the transition to a digital economy and low carbon emissions”.
Spending should be more focused on the jobs of the future, said the global lender in its latest report “Fiscal Monitor”, published in the framework of its annual meetings held this week in virtual form.
Governments have injected $ 12 trillion into the world economy since the start of the pandemic, but now “many countries will have to do more with less, due to increasing budget constraints,” said Vitor Gaspar, head of the Department. of Public Finance of the IMF.
Emerging market economies, with greater funding constraints, will need to reorder spending priorities and improve efficiency. “Some may need official financial support and debt relief,” he said in a blog accompanying the report.
Policy makers “must be more selective” by “gradually” abandoning support for jobs in old sectors to allocate funds for training to enable the unemployed to access the jobs of tomorrow, he said.
Furthermore, “governments must (…) evaluate the application of higher taxes for the wealthiest groups and the most profitable companies,” said Gaspar, who signed the text with his deputy Paulo Medas and two IMF economists, John Ralyea. and Elif Ture.
This additional income would help pay for essential services, they said, including health and social protection networks “during a crisis that has disproportionately affected the poorest segments of society.”
Governments “must move decisively to make economies more inclusive and resilient, and curb global warming with green measures that also boost growth and jobs,” they concluded.