OECD countries’ borrowing needs could reach $12.9 trillion this year
The borrowing needs of the states of the Organization for Economic Co-operation and Development (OECD) countries are forecast to rise 6 percent this year to $12.9 trillion.
According to data from the OECD Government Borrowing Outlook 2023, the need for government borrowing has entered an increasing trend due to the economic difficulties caused by the Russian-initiated war in Ukraine and the support provided to protect households and businesses. of price increases.
Consequently, the borrowing requirement of OECD countries is expected to increase by 6 percent compared to 2022 and reach $12.9 trillion this year. This figure was $12.2 trillion last year.
On the other hand, in 2020, when the anti-epidemic measures came into effect, the borrowing needs of states peaked at $15.4 trillion.
According to the report, states are borrowing 45 percent more than 10 years ago.
THE STOCK OF DEBT CAN SEE $52 TRILLION
The total debt stock in the OECD area increased by $10 trillion in 2019-2021, reaching $50 trillion. It is estimated that the stock of debt, which remained stable last year, will reach 52 trillion dollars in 2023.
Borrowing costs have more than doubled for OECD countries since 2021, due to monetary policy tightening against high inflation. The net borrowing cost of governments in the OECD area increased from 1.4 percent in 2021 to 3.3 percent in 2022. This ratio is expected to continue to increase in the near term.
Although countries face high financial risks as a result of rising borrowing costs, states are expected to have to allocate a large part of their budgets to debt and face greater financial difficulties.
THE WAR WAS EFFECTIVE
In his assessment of the report’s findings, OECD Secretary General Mathias Cormann said that 2023 is a year in which long-standing favorable conditions for government borrowing will end.
“This year, the states tried to keep up with the rapid changes in market conditions caused by the financial and economic effects of Russia’s war in Ukraine. “These recent developments have highlighted the importance of the ability of public debt managers to adapt and respond to changing market conditions and to establish a credible institutional framework for debt management.” (AA)