IMF: New record for global debt in 2020, reached $ 226 trillion.

The global debt in 2020 jumped to a new record, reaching 226 trillion. as it showed the largest annual rise since World War II, according to the International Monetary Fund in an analysis released today, while warning of the risks of a sharp rise in interest rates.

In a post on the IMF blog, Vitor Gaspar, Paulo Medas and Roberto Perrelli report that the coronavirus pandemic and the global recession boosted debt to 256% of world GDP in 2020, up 28 percentage points from the previous year.

90% of the debt increase came from advanced economies and China, which took advantage of low interest rates. In developing countries, debt has risen less, as these countries are often faced with high borrowing costs and limited access to new financing.

Pay attention to interest rates

At the same time, IMF Fiscal Policy Director Vitor Gaspar and other Fund officials warn in their article that higher interest rates will offset the impact of increased fiscal spending. [για την αντιμετώπιση της κρίσης] and will once again intensify concerns about debt sustainability.

“The risks will intensify if global interest rates rise faster than expected and growth slows,” they said.

“A significant tightening of financial conditions would intensify pressure on countries, businesses and households with higher debt. If the private and public sectors are forced to leverage at the same time, growth prospects will deteriorate,” they said.

At the same time, they warn of risks from the termination of the quantitative easing programs implemented by the central banks of developed economies.

“Central banks plan to reduce large purchases of government debt and other assets in developed economies,” they said. “The way this reduction is done will have an impact on economic recovery and fiscal policy,” they warn.