Middle-east Arab News Opinion | Asharq Al-awsat

World Drenched in Debt, Major Powers the most Affected - ASHARQ AL-AWSAT English Archive
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Cairo-The International Monetary Fund (IMF) has released its fiscal report uncovering that global debt had increased to $152 trillion at the end of last year, a new record that countries must face.

The report said that global public and private debts had reached 225 percent of global GDP, an increase from around 200 percent in the year 2002.

Two-third of the debt, amounting to about $100 trillion, consists of liabilities of the private sector, which can carry great risks when they reach excessive levels, the IMF said.

Despite the rise in global debt, the IMF had encouraged some countries to increase their spending to boost growth.

The release of the report coincided with IMF Managing Director Christine Lagarde’s renewed calls on countries to further boost growth by increasing spending when possible, keeping interest rates extraordinarily low and implementing pro-business reforms aimed at improving economic efficiency.

The IMF said private debts had specifically increased in the economies of mature world powers and a small number of emerging markets.

According to the Institute of International Finance (IIF), global debt, across the household, government, financial and non-financial corporate sectors, rose by more than $10 trillion in the first half of 2016, surpassing $216 trillion, or 327 percent of global GDP.

The highest increases were registered in the non-financial corporate sector, which rose by $3.3 trillion to over $63 trillion, and in the government sector where issuances rose by $3.3 trillion to near $59 trillion.

The report added that mature market debt is quickly approaching 400 percent of GDP, with the issuance of total debt across mature market sectors increasing by $8 trillion to over $163 trillion during the first half of the year.
Therefore, the level of debt has now moved to 393 percent of GDP in developed markets, more than 50 percentage points higher than a decade ago.

Osama Ansari, professor of Finance and Banking at the Cairo University told Asharq Al-Awsat that the level of global debt constitutes an overall threat, but it differs from one country to another, adding that this debt was not high enough to produce a global financial crisis.