The world’s combined debt has surged to an astonishing $235 trillion, with the United States and China collectively accounting for a significant 50% share, totaling $117.5 trillion. This alarming revelation comes from the International Monetary Fund’s latest global debt update titled “Global Debt Is Returning to its Rising Trend.”

In just one year, from 2021 to 2022, global debt skyrocketed by an additional $200 billion, pushing it to an astonishing 238% of the world’s Gross Domestic Product (GDP). This alarming figure stands nine percentage points higher than the level recorded in 2019, highlighting a deeply concerning trend.

The IMF’s scrutiny primarily falls on developed nations as the major contributors to this ballooning global debt crisis. It singles out economic giants China and the United States, which collectively contribute a staggering $117.5 trillion. China is recognized as the world’s largest contributor to non-financial corporate debt, holding a substantial 28% share of global corporate debt.

The IMF’s report emphasizes the troubling surge in debt levels observed in low-income developing countries over the past two decades. The post-global financial crisis era witnessed a rapid acceleration in debt accumulation, leading to various challenges and vulnerabilities across these economies.

Presenting the global debt update were three distinguished IMF officials: Vitor Gaspar, Director of the Fiscal Affairs Department; Marcos Poplawski-Ribeiro, Deputy Director; and economist Jiae Yoo. Their report serves as a stern warning to policymakers worldwide, urging them to remain resolute in their commitment to preserving debt sustainability.

In response to the mounting debt challenges, the IMF offers guidance to governments worldwide, stressing the need for immediate and decisive measures to mitigate debt vulnerabilities and reverse the ominous long-term debt trajectory. Vigilant monitoring of private sector debt burdens, including household and non-financial corporate debt, along with related financial stability risks, is recommended.

For low-income developing countries grappling with unsustainable debt, the IMF advocates a comprehensive approach that includes fiscal discipline and debt restructuring under the Group of Twenty Common Framework, a multilateral mechanism for forgiving and restructuring sovereign debt when applicable. Importantly, reducing debt burdens can create fiscal space for new investments, fostering economic growth in the coming years.

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