London: According to a research released Tuesday by the Institute of International Finance, the world’s debt stock reached a new year-end record of $318 trillion, while economic growth slowed, causing the global debt-to-GDP ratio to increase for the first time since 2020 last year. The $7 trillion increase in global debt was less than half of the increase in 2023, when a rush in borrowing was triggered by anticipation of interest rate cuts from the Federal Reserve. However, the IIF cautioned that if growing budget deficits continue, governments may face punishment from so-called bond vigilantes.
“A defining characteristic of recent years has been the increased scrutiny of fiscal balances, especially in nations with highly polarised political landscapes,” the IIF stated. The brief stint of Prime Minister Liz Truss in the United Kingdom was overthrown by market reactions to fiscal plans in 2022, while Prime Minister Michel Barnier was overthrown by comparable factors in France last year.
A measure of the ability to repay debt, debt-to-GDP, came close to 328 percent, a 1.5 percentage point increase, as the $95 trillion in government debt collided with slowing inflation and economic expansion. In light of the still high cost of borrowing and the extraordinary uncertainties surrounding global economic policy, the IIF stated that it anticipates debt growth to decrease this year.
Also Read:
Registration For Ramadan Volunteers is Now Open in Saudi Arabia
Deposits and Credit Facilities in Egypt’s Banking Industry Have Increased by 27%
