Global government debt will hit $10.4 trillion in 2022, almost a third above average
before the coronavirus pandemic, S&P Global Ratings said in a report.
Despite an economic recovery, borrowing will remain high due to heavy debt restructuring requirements and the war in Ukraine, the rating agency said in an annual statement.
While 137 countries will borrow the equivalent of $10.4 trillion in 2022, an estimated 30% less than 2020, the total is a third higher than the average borrowing between 2016 and 2019, S&P said.
“Tightening monetary conditions will push up government funding costs,” S&P analysts said.
“This will pose additional difficulties for states that have been unable to restart growth, reduce reliance on foreign currency financing and whose average interest bills are already critically high.”
Borrowing in emerging Europe, Middle East and Africa (EMEA) will increase by $253 billion to the equivalent of $3.4 trillion by the end of the year, S&P said in an accompanying report on Thursday.
Egypt, which recently requested IMF aid, will overtake Turkey as the region’s largest sovereign bond issuer, with bond sales worth $73 billion, S&P analysts predict.
Among the world’s larger countries, Kenya, Egypt and Japan have the largest share of debt due for rollover this year, the analysts said, citing short-term debt accounting for 26% and 30% of total debt stocks in Egypt and Kenya, respectively.
Commercial debt in EMEA’s emerging markets is expected to rise to 37% of GDP from 31% in 2016, driven by pandemic-related costs, a rise in commercial borrowing in Oman and Saudi Arabia and “persistently high budget deficits” in Egypt and Egypt Romania is strengthened.
In emerging markets, analysts at JPMorgan said in a note on Monday that the corporate default rate could reach 8.5% this year, more than double the 3.9% they expected before Russia invaded Ukraine had, and the highest since the global financial crisis.
