'I don't know whether to consider this as good news or not.'
Global debt (public and private) is reported to reach $235 trillion, a slow increase and overall experiencing the largest decline in 70 years in 2021.
The matter was explained by the International Monetary Fund (IMF) regarding the amount of global debt that fell by 10% at 247% of the gross domestic product (GDP) during 2021 compared to the peak of 257% during 2020.
The IMF also clarified that private debt including non-financial corporate and household obligations was the biggest contributor to the decline with a 6% contraction at 153% of GDP during 2021.
Public debt also decreased by 4% at 96% of GDP, which according to the IMF is the largest reduction in decades.
This drastic change can be attributed to the economic debt recovery from Covid-19 and the rapid increase in inflation.
Based on the note, the director of fiscal affairs of the IMF, Vitor Gaspar, put the projection of the 2022 debt ratio of each country to shrink but the outlook for 2023 is the opposite.
This is because global debt is still at pre-pandemic levels and far from the lowest level of 195% in 2007, which is before the financial crisis broke out.
Coupled with the forecast economic downturn in most countries will increase the cost of paying off debt next year.
In the meantime, low-income countries are expected to face debt payment problems with the ratio continuing to increase in 2021 due to high private debt.
Paulo Medas, who is responsible for examining the IMF's Fiscal, said the debt level of low-income countries is the highest since the aid of the late 1990s and early 2000s.
This also indirectly raises debt repayment concerns in both low-income and poor countries.
