The International Monetary Fund has said that the worldwide public and private debt is at an all-time high, posing a substantial impediment to getting global economic growth back to normal. In its new report, it said the easy money policies of the world's top central banks has fed the problem, stoking a private-sector credit binge in China and rising public debt in some low-income countries.
Slow economic growth is making it difficult for countries and companies to cut their debt burdens as it can also drag on growth momentum because deleveraging companies slow spending and investment. Without deleveraging, however, countries risk fresh financial crisis that can turn into deep recessions. IMF's Fiscal Monitor report said, "For a significant deleveraging to take place, restoring robust growth and returning to normal levels of inflation is necessary."
"Global debt is at record highs and rising," the IMF's Fiscal Affairs Department chief Vitor Gaspar said. Public and private debt, excluding the financial sector's last year hit $152 trillion, with around two-thirds owed by the private sector, the report said. Measured against the size of the world economy, it rose from less than 200 per cent of global GDP to 225 per cent over the 15 years to 2015.
