(MENAFN) According to a recent report released by the Institute of International Finance (IIF) on Wednesday, global debt has surged to an unprecedented level, reaching a staggering USD315 trillion during the first quarter of 2024. This figure marks a notable increase of USD1.3 trillion compared to the final quarter of the previous year.
The report highlights a concerning trend of continuous escalation in global debt, occurring against the backdrop of sustained high interest rates on major currencies, notably spearheaded by the dollar, which currently stands at a 23-year peak of 5.5 percent. Notably, countries such as India and China are persistently engaging in significant borrowing activities, contributing to the overall rise in global debt.
The IIF has issued warnings regarding the trajectory of post-pandemic debt reduction efforts, noting that such endeavors have effectively come to a halt as governments opt to enact tax cuts and ramp up spending, particularly amidst a record number of elections taking place worldwide throughout the year 2024. Nearly 2 billion individuals are either currently participating or are expected to participate in presidential elections in various countries, with the United States positioned at the forefront of this electoral activity.
Of particular concern is the substantial increase in debt witnessed in emerging markets, which has soared to an unprecedented level exceeding USD105 trillion. This surge in debt is primarily attributed to borrowing activities within these markets, indicating a significant reliance on debt financing for economic activities.
The report further underscores the International Monetary Fund's (IMF) recent cautionary statement regarding India's burgeoning debt burden, which is projected to surpass the size of its economy by the end of the decade. This projection is fueled by India's ongoing expenditure of billions of dollars annually to address the aftermath of natural disasters and other related challenges.
In summary, the report paints a sobering picture of the global debt landscape, characterized by record-high levels of indebtedness, persistent borrowing patterns in key economies, and a consequential impact on fiscal policies and economic stability worldwide.
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