Sonali Ray, writer
Brief news
- Saudi Arabia’s finance minister, Mohammed Al-Jadaan, highlighted concerns over rising sovereign debt, particularly in low-income countries, as a significant threat to global markets.
- He emphasized the need for collaboration among the IMF, G20, and other institutions to address these debt issues.
- The UN reported a record global public debt of $97 trillion in 2023, disproportionately affecting poorer nations.
Detailed news
Riyadh – Saudi Arabia’s finance minister expressed particular concern about nations with lower incomes as well as what he characterized as fast expanding global fragmentation. Saudi Arabia’s finance minister stated that national debt is a serious threat to markets in the near future. They are particularly concerned about countries with lower incomes.
According to Mohammed Al-Jadaan, who was speaking to Dan Murphy of CNBC on Wednesday from the Future Investment Initiative in Riyadh, “I think globally, the serious, serious issue that we need to watch is sovereign debt issues.” This is especially true in low-income countries and emerging economies that do not have the fiscal buffers to lean into in the event that there are disruptions in the market.
“And I hope that between the International Monetary Fund and the G20, we will be able to find a solution, and we will be prepared to support the global economy in the event that shocks occur in that area. However, it is an area that we, as leaders of the global community, need to keep an eye on to ensure that it does not surprise us.”
Earlier on in the talk, Al-Jadaan brought up the significance of achieving a gentle landing for economies in the context of central banks’ efforts to control inflation via their policies.
“We arrived from Washington two days ago, after a week full of meetings at the International Monetary Fund, the World Bank, and the G20, and I believe that there is a clear recognition that the world is actually proving to be resilient,” he added. “As well as a great deal of conversation concerning the management of the soft landing, which is of utmost significance. The primary obstacle is really sovereign debt, and a significant amount of conversation that took place over the course of the previous week was centered on the idea of ensuring that the three institutions collaborate in order to try to find a solution to the problem of sovereign debt, particularly in countries with low incomes.
In 2023, the total amount of public debt throughout the globe reached a new all-time high of $97 trillion, which prompted the United Nations to issue a demand for immediate changes by governments and financial systems all over the world.
In a study that was published in June of this year, the United Nations stated that “faltering economies in the wake of multiple global crises have resulted in a heavier debt burden across the globe,” particularly in Africa. Based on the findings of the analysis, the number of African nations that have debt-to-GDP ratios that are more than sixty percent has increased from 6 to 27 between the years 2013 and 2023.
There has also been an increase in the cost of repaying debt, which has had a more significant impact on poor nations and emerging markets.
The statement was made by Al-Jadaan on Wednesday. “I think the painful fact is that low-income countries, a lot of them, are now having today their debt service that is actually more [costly] than their health care, education, and climate action combined,” Al-Jadaan added.
“We need to make sure that we find a solution to that problem because it is not good for the world,” the speaker said. Hopefully, we will be able to, and we are working together throughout the globe to find a solution to that problem.
Source : CNBC News
