IMF: World debt to reach record high

Private debt the most serious problem

A study released by the IMF revealed that private and public debt across the globe have reached unprecedented levels. The report claims the aggregate debt last year exceeded the world’s generated wealth by more than double. Not counting the financial sector, global debt amounted to 152 trillion US dollars at the end of 2015, translated into 255% of world’s nominal GDP. The head of the IMF’s fiscal affairs department, Vitor Gaspar expressed his concern about the large debt. “Excessive private debt is a major headwind against the global recovery and a risk to financial stability,” he said in prepared remarks. “History has taught us that it is very easy to underestimate the risks associated with private debt during the upswing.”, he stressed. The private sector was mainly responsible for the huge increase in debt accounting for over two thirds of the aggregate world debt. Governments also piled on more public debt exacerbating the already negative global financial situation, the report noted. Japan’s public debt is expected to reach 250% in 2016, while Greece’s will be 183.4%, according to the Fund’s projections.