IMF says global debt well above pre-pandemic levels despite steep 2021 drop  

 

• Global public and private debt saw its biggest drop in 70 years in 2021 after reaching record highs because of the impacts of COVID-19, but overall remained well above pre-pandemic levels, the International Monetary Fund said on Monday, Dec. 12.
• In a blog released with its inaugural Global Debt Monitor, the IMF said total public and private debt decreased by 10 percentage points to 247% of the global gross domestic product in 2021 from its peak of 257% in 2020. That compares to around 195% of GDP in 2007, before the global financial crisis.
• The unusually large swings in debt ratios - or "global debt rollercoaster" - were caused by the economic rebound from COVID-19 and the ensuring swift rise in inflation, the IMF said.
• There are growing concerns about the ability of low- and middle-income countries to repay their debts, with an estimated 25% of emerging market countries and over 60% of low-income countries either in or near debt distress.
• High inflation levels continued to help reduce debt ratios in 2022, but spending will increase if inflation becomes persistent, which could lead to higher premiums. The IMF said governments should pursue fiscal policies that help reduce inflationary pressures now and debt vulnerabilities over the long term while continuing to support the most vulnerable.

(Source: Reuters