DEBT
BreakingTop StoryTrending Story

Global debt surged to $226 trillion in 2020, says IMF

463

Global debt soared to $226 trillion in 2020, the largest one-year debt surge since the Second World War, the International Monetary Fund said.

“Debt was already elevated going into the crisis, but now governments must navigate a world of record-high public and private debt levels, new virus mutations, and rising inflation,” the IMF’s Virat Singh, Andrew Womer, and Yuan Xiang, wrote.

“The large increase in debt was justified by the need to protect people’s lives, preserve jobs, and avoid a wave of bankruptcies. If governments had not taken action, the social and economic consequences would have been devastating,” IMF staff wrote.

Global debt rose by 28 percentage points to 256 per cent of gross domestic product in 2020, according to the Washington-based lender’s latest update of its Global Debt Database, monitored by Persecondnews.com.

Government borrowing accounted for more than half of the increase, with the global public debt ratio rising to a record 99 per cent of GDP. Private debt from non-financial corporations and households also reached new highs.

In advanced economies, public debt rose to 124 per cent of GDP in 2020, from about 70 per cent in 2007. Private debt increased to 178 per cent of GDP, from 164 per cent in 2007.

Public debt now accounts for about 40 per cent of total global debt, the highest share since the mid-1960s, owing largely to the 2007-2009 global financial crisis and then the Covid-19 pandemic.

Advanced economies and China accounted for more than 90 per cent of the $28 trillion debt surge in 2020.

Countries of advanced economies were able to take on more debt due to the low interest rate environment during the pandemic. Developing economies faced limited access to funding and higher borrowing rates.

As fiscal deficits soared during the Covid-19 pandemic in advanced economies, revenues in those countries plunged amid the ensuing recession. Public debt increased at a similar level seen during the global financial crisis, but private debt jumped by about twice as much as during the global financial crisis.

Governments and central banks across the world have provided more than $16tn of fiscal and $9tn of monetary support to help economies recover.

“But the debt surge amplifies vulnerabilities, especially as financing conditions tighten. High debt levels constrain, in most cases, the ability of governments to support the recovery and the capacity of the private sector to invest in the medium term,” the IMF said.

The challenge now is to strike the right balance between fiscal and monetary policies against a backdrop of high debt and rising inflation, it said.

Leave a comment

Related Articles

Just in: Senate confirms Omolola Oloworaran as DG PENCOM

The Senate on Thursday confirmed the nomination of Omolola Oloworaran for appointment...

Just in: Senate approves Tinubu’s $2.2 bln loan request

The Senate on Thursday approved President Bola Tinubu’s loan request of $2.2...

Just in: Reps reject bill for six-year single tenure for president, governors

The House of Representatives rejected a constitutional amendment bill on Thursday seeking...

Just in: Simon Ekpa, four others arrested in Finland over terror-related activities

Finnish-Nigerian separatist agitator, Simon Ekpa, and four others have been arrested in...

Just in: FG sacks Nnamdi Azikiwe University VC

The Vice-Chancellor of Nnamdi Azikiwe University, Awka, Anambra State, Prof. Bernard Odoh,...

Senate raises alarm over fresh terrorists’ invasion from Mali, Burkina Faso, urges FG’s action 

Upset by the invasion of terrorists known as Lakurawa into Northern Nigeria...

Boko Haram/ISWAP terrorists’ ambush: Defence HQ confirms killing of 5 soldiers in Borno

The Defence Headquarters has confirmed that Boko Haram/ISWAP terrorists ambushed troops conducting...

Tinubu writes NASS for approval of $2.2bln fresh external loan

President Bola Tinubu has written to the National Assembly, seeking the approval...

NNPC Ltd’s spokesman, Soneye, explains delay in Port Harcourt Refinery rehabilitation, assures of imminent completion

The Nigerian National Petroleum Company Limited (NNPC Ltd.) has acknowledged the challenges...

AFCON Qualifier: Nigeria’s Super Eagles Suffer Shocking 2-1 Loss to Rwanda

Nigeria’s Super Eagles concluded their Africa Cup of Nations Group D qualifiers...

Tax reform bills: Nigeria struggling with tax-to-GDP ratio below World Bank’s 15 % benchmark – Speaker Abbas

Mr. Tajudeen Abbas, the Speaker of the House of Representatives, has expressed...

Just in: Again, Anambra sit-at-home claims four vigilance operatives, motorcyclist

Gunmen enforcing Monday’s sit-at-home order in Anambra State launched a deadly attack,...

Tinubu departs Abuja for G20 leaders’ summit in Brazil

President Bola Tinubu will depart Abuja for Rio de Janeiro, Brazil, on...

First Bank changes its name to First Holdco Plc, brand name to FirstHoldco

First Bank of Nigeria (FBN) Holdings Plc is to change its name...

Breaking: APC’s Aiyedatiwa in landslide victory, wins all 18 LGAs in Ondo guber poll

The All Progressives Congress Candidate, Gov. Lucky Aiyedatiwa, has swept the 2024...

Ondo guber poll: Aiyedatiwa votes, says exercise peaceful, PDP raises alarm over thugs invasion

As the Ondo State governorship election kicks off on Saturday, Gov. Lucky...

Late COAS Lagbaja buried in Abuja amid tears, tributes

Amid tears and tributes, the body of the late Chief of Army...

Tinubu appoints Daniel Bwala, Atiku’s ex-spokesman as Special Adviser on Media, three DGs

President Bola Tinubu has appointed Daniel Bwala, the Special Adviser on Media...

Just in: Body of late COAS Lagbaja arrives in Abuja ahead of Friday burial

The body of the late Chief of Army Staff, Lt.-Gen. Taoreed Lagbaja,...

Tinubu Presides Over Crucial FEC Meeting to Unveil 2025 Budget Plans

The much-anticipated meeting of the Federal Executive Council (FEC) is underway with...