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MNI: Government Debt Is 40% of Global Stock, Most Since 1960s

WASHINGTON (MNI)

IMF sees risk to poorer nations from rising interest rates and policy missteps.

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Government debts surged to 40% of the global stock during the pandemic, the highest in half a century, leaving poorer nations exposed to rising interest rates and policy missteps according to the IMF.

Global debt rose 28pp to 256% of GDP in 2020 in the largest surge since WWII, and public debt reached a record 99% of GDP according to figures the Washington-based group released Wednesday.

Advanced economies led the borrowing with public debt jumping from 70% of GDP in 2007 to 124% in 2020. Developing nations are also seeing record debt obligations and have less room for manoeuvre, the IMF said. MNI has reported smaller open economies may need to raise rates faster.

"A significant tightening of financial conditions would heighten the pressure on the most highly indebted governments, households, and firms. If the public and private sectors are forced to deleverage simultaneously, growth prospects will suffer," according to an IMF blog post.