International Organizations Warned About Rising Debt and Borrowing Risks
Three major international organizations have issued serious warnings about rising debt levels and increasing borrowing costs in major economies. The Paris-based Organization for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF), and the International Institute of Finance (IIF) highlighted the risks posed by high interest rates as global debts reach $365 trillion. The IIF predicts that the debt burden will increase alongside governments' and companies' efforts to invest in new technologies.
The latest report from the IIF states that the debt situation of some major economies, such as the United States, France, the United Kingdom, and Japan, can be compared to that of developing countries in crisis. It emphasized that these countries are facing large budget deficits and increasing interest expenses, indicating that this situation could become unsustainable. It is also predicted that politicians preparing for elections in the coming months may complicate this situation further due to concerns that cutting spending will not be popular among voters.
UK Prime Minister Andy Burnham rejected criticisms regarding the poor state of public finances during the UN General Assembly in New York. Burnham stated that he understood the situation when he took office and was not surprised by it. However, it was also noted as a fact that the geopolitical situation in the Middle East affects costs.
The OECD emphasized that the rising management costs of public debts are one of the main risks for the global economy. The organization revised its global growth forecast for this year to 2.9%. However, it warned that rising oil and gas prices could pose risks in the upcoming period. Additionally, it was noted that natural factors such as the El Niño weather event could negatively impact agricultural production, leading to increased food prices.
As a result, international organizations emphasize that the growing debt burden and rising interest rates threaten the stability of the global economy and that urgent measures need to be taken on these issues. Political will is expected to take the necessary steps to face these challenges.
