Global debt: OECD warns of risk of debt overhang

The OECD Organisation for Economic Co-operation and Development has warned that global public debt will pass a historic threshold in 2024, topping the 100,000 billion dollar mark.

Despite the beginnings of monetary easing, borrowing costs remain high, complicating the budgetary management of governments and businesses. The ageing of the population and the ecological transition are likely to add even more to the bill, at a time when some countries, such as Germany, are relaxing their budgetary rules to boost investment.

For the OECD, this surge in debt could limit future borrowing capacity, at a time when investment needs are crucial. Debt is becoming more expensive and could weigh on growth if the funds raised do not finance productive projects.

According to Serdar Celik, head of financial markets at the OECD, everything will depend on how this debt is used. If it supports innovation and the real economy, the impact will be limited. If not, it could fragilise global finances even further and reduce governments’ room for manoeuvre in the face of future crises.

source: Agefi.com