The general director of the International Monetary Fund (IMF), Kristalina Georgieva, said that the world economy has reached a record debt equivalent to 230% of the world’s gross domestic product, equivalent to an increase of US $ 188,000 million. With this figure, world debt increased to 14.6% compared to the IMF estimate for April 2018 on US $ 164 billion.
This increase, according to Georgieva, puts governments and individuals at risk if the economy slows down. “The private sector is one of the main drivers of this accumulation, which currently represents almost two thirds of the total debt level”.
The official also said that “the public debt of emerging markets has reached the levels recorded during the debt crisis of the 1980s. And the debt burden of low-income countries has increased considerably in the last five years.”
The executive requested measures to ensure that “loans are more sustainable”, which means that credit practices are more transparent and prepare for debt restructuring with “non-traditional lenders” such as China that has become one of the most important creditors for nations in world development.
According to Georgieva’s analysis, high debt not only represents a risk to financial stability but can become an obstacle to economic growth, “The conclusion is that high debt burdens have left many governments, businesses and households vulnerable to a sudden tightening of financial conditions”, she warned.