DEBT
BreakingTop StoryTrending Story

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

242

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

Breaking: Tinubu announces suspension of sanctions on Guinea, Mali, Niger, Burkina Faso

President Bola Tinubu has demanded that the Economic Community of West African...

ECOWAS Chair, Pres. Tinubu, presides over regional body’s summit in Abuja

President Bola Tinubu on Saturday presided over Extraordinary Summit of heads of...

Blackout: COAS laments decomposing corpses in Army mortuaries

The Chief of Army Staff (COAS), Lt.-Gen. Taoreed Abiodun Lagbaja, has frowned...

Harsh economy: NIN required as Customs begins distribution of seized food items to poor Nigerians

In a bid to alleviate the current hardship in the country, the...

APC’s Sen. Okpebholo emerges candidate for Edo governorship poll

Sen. Monday Okpebholo of the All Progressives Congress (APC) has been declared...

$800m rehabilitation funds for Nigerian ports almost ready – FG

The Minister of Marine and Blue Economy, Mr. Gboyega Oyetola, has said...

Emefiele slams N25bln suit on Akpabio for alleged defamation 

The ex-governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has...

FG Uncovers 32 Routes for Smuggling Food Out of Nigeria

The Federal Government says it has uncovered 32 routes through which food...

State Police Bill scales second reading in House of Reps

A bill proposing an amendment to the 1999 Constitution to establish state...

Presidential Villa, EFCC, FIRS, 83 other MDAs risk total blackout over N47.1bln electricity debt

The Abuja Electricity Distribution Plc (AEDC) has threatened to disconnect the electricity...

Rising cost of living may trigger social unrests in Nigeria, Kenya, others, AfDB warns

The African Development Bank (AfDB) has raised the alarm that rising prices...

Brave NAF officer foils ‘one chance’ robbery, rescues victims in Abuja

A serving officer of the Nigerian Air Force (NAF), Air Commodore John...

Nigeria ready to host African Central Bank, prepare youths for 21st century economy, Tinubu tells AU leaders

President Bola Tinubu says Nigeria is ready to host the African Central...

Tinubu Appointed AU Champion for Health

President Bola Tinubu has been appointed the African Union (AU) Champion for...

FG appoints CEOs, board chairpersons for NAFDAC, NCDC, PCN, others

In furtherance of his determination to bring world class standards to the...

Insecurity: FG, state governors agree to create state police

To tackle headlong insecurity and the ongoing wanton killings across the country,...

Economic hardship, insecurity: Tinubu in emergency meeting with 36 state governors

President Bola Tinubu held an emergency meeting with the 36 state governors...

Sultan warns: “We can’t stop people from revolting because of economic hardship”

The Sultan of Sokoto and President–General, the Supreme Council for Islamic Affairs...

Emefiele: FG Asks Interpol To Place Three Nigerians On Watchlist Over CBN $6.2m Fraud

The Federal Government has asked the International Police (Interpol) to place three...

Marine and Blue Economy Minister Oyetola receives port community system report, lauds NPA MD, Bello-Koko

The Nigerian Ports Authority (NPA) and the International Port Community Systems Association...