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Global Debt To Rise To All-Time High Of $ 226 Trillion In 2020, IMF Says | Coronavirus

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This represents an increase of 28%, the largest since World War II.

Government borrowing accounted for just over half of this increase also rising to a record (99% of gross domestic product worldwide) while private debt of non-financial corporations and households has also reached new highs, detailed Vitor Gaspar and Paulo Medas, responsible for budgetary affairs of the International Monetary Fund and Roberto Perrelli, Fund economist in a blog post.

Government debt alone now represents nearly 40% of total global debt, the highest share since the mid-1960s, they specify.

The accumulation of public debt is the direct consequence of two major economic crises, the 2008 global financial crisis, then the COVID-19 pandemic.

In 2020, the sharp increase in debt was justified by the need to protect people’s lives, preserve jobs and avoid a wave of bankruptcies, they point out. If governments had not acted, the social and economic consequences would have been devastating.

But, they also observe that this level of debt amplifies vulnerabilities, especially since financing conditions will be less favorable in the future with interest rate hikes expected in a context of high inflation.

High debt levels limit, in most cases, the ability of governments to support recovery and the ability of the private sector to invest in the medium term, they finally recall.

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