‘Growth of debt in the world is a matter of concern’- RBI Governor
New Delhi| Reserve Bank of India Governor Shaktikanta Das has cautioned the world about rising global debt, which has risen to US$315 trillion, equivalent to 333 percent of global GDP in 2024.
Speaking at the ‘Future of Finance Forum 2024’ in Singapore on Friday, Reserve Bank of India Governor Das said this unprecedented level of debt poses a huge risk especially for emerging market economies (EMEs) and low to middle income countries. Such countries are increasingly vulnerable to financial instability.
Low-income and some middle-income countries are very weak, Das said. The coexistence of high levels of debt and high interest rates could fuel the vicious circle of financial instability through loss of government and private sector balance sheets
He said the current fiscal scenario has been further complicated by the rising fiscal deficit, which is now higher than pre-pandemic levels. Das said that with 88 economies entering the electoral cycle in 2024, the scope for fiscal consolidation appears limited. This makes it important for different countries to manage their debt effectively to avoid exacerbating financial risks.
The RBI Governor also pointed out that ongoing geopolitical tensions and supply chain disruptions have exacerbated risk aversion among investors, leading to increased cross-border trade restrictions.
RBI Governor called for collective efforts to address the growing challenges in the global economy. He advocated strengthening multilateral development banks (MDBs) to deal with shared global issues. They also underlined the importance of international cooperation in achieving sustainable economic growth and financial stability. RBI Governor Das urged nations to work towards an integrated future for all.
