14th September, 2023
The International Monetary Fund (IMF) said the world’s two biggest economies, the United States and China account for half of the world’s total debt of $235 trillion.
Both economic power houses owe $117.5 trillion. While China owes $47.5 trillion, the US is world’s biggest debtor, owing $70 trillion.
In its global debt update, titled: Global Debt Is Returning to its Rising Trend, the IMF said in a space of one year from 2021, global debt position rose by $200 billion to $235 trillion.
This is equivalent of 238 per cent of the world’s Gross Domestic Product (GDP), as of 2022.
According to the IMF, the debt level is nine percentage points higher than in 2019.
But the IMF laid the weight of the rising cause of global debt on developed nations, fingering US and China.
It said debt in low-income developing countries has risen “significantly in the last two decades,” adding: “The pace of their increases since the global financial crisis has created challenges and vulnerabilities.”
In the global debt update anchored by three senior officials of the IMF – Vitor Gaspar, the Director of Fiscal Affairs Department; Marcos Poplawski-Ribeiro, Deputy Director; and Jiae Yoo, an economist – the IMF warned policymakers to be steadfast and “unwavering over the next few years in their commitment to preserving debt sustainability”.