OMFIF Economic and Monetary Policy Institute

🪙A fiscal crisis is looming across the world. Governments face tepid productivity growth, which is constraining revenues. Meanwhile, pressures on the expenditure side will continue to mount over the coming years owing to rising interest payments, ageing populations, asset maintenance and climate change. Long-term fiscal projections make for grim reading. For instance, the Congressional Budget Office forecasts that the total US federal deficit will rise to 8.5% of gross domestic product over the next 30 years, from 5.6% in 2024. The International Monetary Fund projects that global public debt will approach 100% of GDP by the end of the decade. It is something of a fantasy to expect that governments can operate under current conditions for a prolonged period. Against this backdrop, OMFIF has published a new report in collaboration with EY. ‘The future of public money’ outlines the need for an urgent rethink of how public spending is framed, conducted and evaluated to ensure governments can meet growing societal demands while improving the sustainability of public finances. To inform this report, OMFIF and EY conducted three steering committee meetings with public finance experts from organisations including the International Monetary Fund, US Treasury, US Congress, European Commission, UK National Audit Office, rating agencies, banks and academia. These insights are supplemented by analysis of external reports and OMFIF’s research. Read the report here: https://lnkd.in/eizZTceS

External debt is a growing concern across the continent. As a share of GDP, it has risen for 18 countries between 2022 and 2023. The Absa Africa Financial Markets Index 2024 explores the causes and effects in depth, click to access the index: https://lnkd.in/emR6CQxw

📊For now credit spreads are continuing to compress despite elevated levels of supply. To what extent this will evolve as markets move into a lower yield environment with the easing of monetary policy? Flavio Carpenzano, fixed income investment director at Capital Group, joined Burhan Khadbai, head of content for OMFIF's Sovereign Debt Institute, to look back at the performance of the investment grade credit market in 2024 and the outlook for next year. 💰They discussed how credit spreads are continuing to compress despite elevated levels of supply and to what extent this will evolve as markets move into a lower yield environment with the easing of monetary policy. The discussion also looked at the opportunities in IG credit and the risks for the sector from the volatility in rates driven by macroeconomic and geopolitical factors. Listen to the podcast: https://lnkd.in/dJWPWAMa

We are partnering with the Commodity Discovery Fund for the launch of ‘Gold and the new world disorder’ on 11 December. Gold is now back in vogue among central banks worldwide as the ultimate safe asset. The report explains the reasons why central bank gold purchases have surged, with countries as wide-ranging as the Czech Republic, Ireland, Poland , Qatar and Singapore joining traditional buyers such as the central banks of China , Turkey and India. This trend reflects further reserve diversification and concerns over the status of the dollar, marking a key phase in OMFIF’s long-run analysis of the ‘Seven Ages of Gold’, first postulated in 2016. 

How will policy and politics shape sovereign credit in 2025? Join OMFIF and Fitch Ratings for a virtual panel discussion on 22 January, exploring the key trends defining the global credit landscape. 💡 What to expect: 👉A deep dive into public finances in advanced and emerging markets. 👉Expert insights on sovereign debt trajectories amid shifting policies. Find out more and register to attend: https://lnkd.in/eH5ZGAzd

Yesterday, Dave Ramsden, Deputy Governor of the Bank of England, joined OMFIF to provide insights into the UK's financial stability landscape. If you missed the live stream, the session is now available to watch on demand: https://lnkd.in/eiqMuYdi We are also pleased to note that the discussion received coverage in Bloomberg: https://lnkd.in/eVd_mqiE

💰In 2022 and 2023, close to half of funds surveyed in our annual Global Public Funds report highlighted inflation as their primary macroeconomic concern. Now price pressures have eased, public pension and sovereign funds are focusing on the fundamental drivers of long-term economic and market outcomes. Close to 60% said that technological change or equilibrium real interest rates are the most important factor shaping their 5-10-year investment strategies. Read Global Public Funds 2024: https://lnkd.in/eJsYda4k

Join us at 12:30 today to hear Dave Ramsden, deputy governor of the Bank of England to discuss topical UK financial stability issues from his vantage point as a Financial Policy Committee member with executive responsibilities for the Bank’s market operations: https://lnkd.in/eM-2f-fv

🌏On Wednesday, we hosted our third China-UK investor forum, following the success of the events held in 2022 and 2023. Thank you to our partners, (Bank of China, China Construction Bank (Asia), China Chamber of Commerce in the UK) community partner (Lau China Institute, King's College London) and all of the speakers for making the event such a success. Rewatch Jin Liqun's (president of the Asian Infrastructure Investment Bank (AIIB)) speech: https://lnkd.in/dW2bjDG6 Read David Marsh’s opening remarks: https://lnkd.in/eQ33-YCg Read Ambassador Zeguang Zheng’s opening remarks: https://lnkd.in/e4tEYw7m

Excited to share that Reuters have covered our recently released Global Public Funds 2024! https://lnkd.in/e5mZA4rV "Sovereign and public funds managing $6.5 trillion are putting risk back on the menu as inflation fears fall from the list of top concerns, and are betting big on India". Read OMFIF's Global Public Funds 2024: https://lnkd.in/eJsYda4k