Barbados is not the only country managing a larger debt porfolio.
A group of International Monetary Fund (IMF) experts says that while global debt has stabilised it remains at an elevated level.
The stability was attributed to a continued reduction in private-sector lending offsetting greater borrowing by governments, but global debt remains above 235 per cent of global gross domestic product (GDP).
Total debt increased slightly to US$251 trillion, with public debt rising to US$99.2 trillion and private debt decreasing to US$151.8 trillion.
This information from the IMF’s Global Debt Database was analysed by Vitor Gaspar, director of the IMF fiscal affairs department, Carlos Eduardo Goncalves, a senior economist in the department, and Marcos Poplawski-Ribeiro, a deputy chief in the department’s fiscal policy and surveillance division.
Their advice for governments was that they should help manage the various trends “by prioritising gradual fiscal adjustments within a credible medium-term plan to reduce public debt, while helping to avoid crowding-out private borrowing and investment”.
“At the same time, fostering an environment that boosts economic growth and reduces uncertainty will help ease public debt and encourage private sector investment,” the experts suggested.
Gaspar and his team reported that private debt had declined to under 143 per cent of GDP, the lowest level since 2015, reflecting a reduction in household liabilities and little change in non-financial corporate debt.
“In contrast, public debt rose to nearly 93 per cent, according to our database reflecting an annual survey of the amount and composition of debt held by governments, businesses, and households,” they stated.
Debt-related trends differ across income groups, the information showed.
“While the United States and China continue to play a dominant role in shaping global debt dynamics, as our April Fiscal Monitor showed, debt and deficit levels in many countries are still high and concerning by historical standards, in both advanced and emerging economies,” said the IMF team
“In the US, general government debt last year rose to 121 per cent of GDP from 119 per cent, while China saw an increase to 88 per cent from 82 per cent.”
Further, excluding the US, public debt in advanced economies fell by more than 2.5 points to 110 per cent of GDP.
“Increases in some large, advanced economies like France and the United Kingdom were offset by declines in Japan and smaller economies, such as Greece and Portugal,” said the IMF team.
“Excluding China, public debt in emerging markets and developing economies edged down to under 56 per cent on average.”
The debt experts also said that private debt trends varied significantly across countries.
The US “experienced a significant drop of 4.5 percentage points, to 143 per cent of GDP, while China recorded an increase of six points, to 206 per cent of GDP”.
“Among other emerging markets and developing economies, private borrowing surged in larger economies like Brazil, India, and Mexico, but declined in Chile, Colombia, and Thailand,” said Gaspar and his team.
The three of them noted that “the persistently high global fiscal deficit, averaging around five per cent of GDP, is the main driver of rising public debt”.
This deficit still reflects legacy costs from the COVID-19, such as subsidies and social benefits, combined with rising net interest costs.
On the other hand, the decline in private debt “stems from different factors depending on the country and income group”.
“In many advanced economies, companies are borrowing less, likely in response to subdued growth prospects, continuing a trend started in 2023,” the analysis stated.
“Elsewhere in large emerging markets and developing economies, rising private debt stems from high interest rates and their impact on non-performing loans, improved near-term growth prospects, and corporate mergers and acquisitions.”
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