Global Debt Rises to Record $226 Trillion in 2020 Due to Pandemic Measures - IMF
WASHINGTON (Sputnik) - The coronavirus pandemic crisis and the measures implemented to address the pandemic have led to a record increase in the global debt to $226 trillion, the International Monetary Fund (IMF) said on Wednesday.
“In 2020, we observed the largest one-year debt surge since World War II, with global debt rising to $226 trillion as the world was hit by a global health crisis and a deep recession. Debt was already elevated going into the crisis, but now governments must navigate a world of record-high public and private debt levels, new virus mutations, and rising inflation,” the IMF said in a blog post.
The IMF explained that the global debt increased by 28 percent to 256 percent of GDP in 2020.
The global public debt ratio increased to a record 99 percent of GDP, while private debt from non-financial corporations and households also reached new highs, it said.
Advanced economies are facing the most significant spike in public debt, which increased from 70% of GDP in 2007 to 124% in 2020, it added.
“The large increase in debt was justified by the need to protect people’s lives, preserve jobs and avoid a wave of bankruptcies,” the IMF said. “But the debt surge amplifies vulnerabilities, especially as financing conditions tighten.”
The high debt levels limit the ability of governments to support the economic recovery and governments should impose targeted fiscal support to solve outstanding economic issues.