IMF chief warns global debt at “all-time high”

WASHINGTON, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva on Thursday warned that the global debt has reached “an all-time high” with the public debt in advanced economies hitting “levels not seen” since World War II.

In a speech at the 20th Annual Research Conference on debt, Georgieva indicated that global debt, both public and private, topped USD 188 trillion, which is about 230 percent of world output. She noted that “emerging market public debt is at levels last seen during the 1980s debt crisis,” whereas low-income countries “have seen sharp increases in their debt burdens over the past five years.” “The current level of record-high debt poses risks to economic and financial stability,” she said, stressing, “The bottom line is that high debt burdens have left many governments, companies, and households vulnerable to a sudden tightening of financial conditions.” Furthermore, she said that global financial conditions have “remained easy, in part because interest rates are low for longer than expected in advanced economies,” but that the world is also facing “increased uncertainty, driven by trade tensions, Brexit, and geopolitical risks.” She warned that high debt “is not just a risk to financial stability; it can also become a drag on growth and development efforts.” In low-income countries, she indicated that it is estimated that 43 percent of low-income countries “are either at high risk of falling into debt distress or are already in distress.” She shed light on three priorities that can “help make a difference in developing countries,” “ensure that borrowing is more sustainable,” and “ensure that borrowing and lending practices are more transparent.” “We need to encourage better collaboration between borrower countries and lenders,” she said, adding, “These issues, from debt sustainability, to transparency, to collaboration, will be critical for the wellbeing of developing countries.”

Source: Kuwait News Agency