A record spike in global public debt to $88 trillion has mounted concerns worldwide.
Global government debt is the total of all borrowing of all countries. Today, every single nation is included on the list of borrowers. Experts name the coronavirus pandemic, or more precisely monetary policy adopted by the world’s leading central banks, as the main reason for exponential growth in global sovereign debt. Low interest rates, large-scale stimulus programs, and the lack of money amid the fight against COVID-19 urge countries to resort to borrowing. At the same time, some countries find themselves in a bind and are forced to take out a loan. So far, it has led to a heavy debt load of some nations, experts at the Institute of International Finance comment on the situation.
Vitor Gaspar, the IMF's head of fiscal policy, says that public debt now totals $88 trillion, close to 100% of global gross domestic product. In 2021 and 2022, government debt is expected to decline by about 1 percentage point of GDP each year. Then, it should stabilize at about 97% of GDP.
According to the IMF, amid rising sovereign debt, countries need to adapt their fiscal policies to the unique circumstances of each region, including the pace of COVID-19 vaccinations and the success of economic recovery.