IMF says record global debt a huge problem

IMF says record global debt a huge problem
The International Monetary Fund (IMF) has warned against a mounting global debt level affecting both the corporate world and private households. It could be the breeding ground for another financial crisis.

The IMF’s fresh Fiscal Monitor report said the world was swimming in a record $152 trillion (135 trillion euros) in debt.
According to the document, global debt, both public and private, reached 225 percent of overall economic output in 2015, up from roughly 200 percent back in 2002.
The Fund warned that about two-thirds of the total was owed by private-sector borrowers, noting that rapid increases in private debt had often led to financial crises.
“Excessive private debt is a major headwind against the global recovery and a risk to financial stability,” IMF Fiscal Affairs Director Vitor Gaspar told reporters in Washington.
China in focus

The report emphasized that the US had deleveraged since the 2008-2009 financial crisis, while there’d been an alarming buildup of private debt in China and Brazil, fueled in part by a long period of low interest rates.

  Spain’s debt capital
The findings came as IMF Managing Director Christine Lagarde was urging member governments with “some fiscal space” to boost persistently weak growth by borrowing and spending more.
That call was accompanied by demands to uphold central banks’ accommodative monetary policies and accelerate structural reforms aimed at improving countries’ economic efficiency.

Reuters
10/6/2016