The International Monetary Fund says global public debt has now passed its post-World War Two record and that rising interest rates in the wealthy economies are dragging up borrowing costs for everyone else.
Managing Director Kristalina Georgieva delivered that assessment at the close of the G20 Finance Ministers and Central Bank Governors meeting in Asheville, North Carolina on Monday.
This could spell trouble for countries like Jamaica, which will depend on borrowing as part of its hurricane recovery.
Chevon Campbell tells us more.
The IMF Managing Director says world public debt now stands at almost one-hundred percent of GDP and is set to climb further.
Kristalina Georgieva describes the trajectory as a staircase, with a big step up each time a shock hits, followed by a small increase or no change.
That’s close to Jamaica’s own experience over the past year.
Jamaica’s debt had been falling for more than a decade, enough for the Fund itself to hold the country up as an example.
Hurricane Melissa interrupted that.
Public debt rose to 65-point-six percent of GDP at the end of March, from 62-point-five percent a year earlier, and the debt stock passed two-point-four trillion dollars.
The Government’s own February projection put the ratio as high as 68-point-nine percent and the legislated target date for returning to 60 percent has not yet been reset.
Public debt at almost one-hundred percent of GDP worldwide now exceeds its post-World War Two highs and is set to climb further; the debt trajectory resembles a staircase.
Ms. Georgieva also warns that the energy shock is not over, pointing to the Strait of Hormuz, which she says remains largely closed.
Jamaica is already carrying that cost.
Inflation reached seven-point-five per cent in July, above the Bank of Jamaica’s four-to-six percent target, driven in part by international commodity prices.
The central bank has held its policy rate at five-and-a-half percent, and does not expect inflation back inside the target range until the middle of next year.
