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Global Waves of Debt : Causes and Consequences
Waves of debt accumulation have been a recurrent feature of the global economy over the past fifty years. In emerging and developing countries, there have been four major debt waves since 1970. The first three waves ended in financial crises?the Latin American debt crisis of the 1980s, the Asia financial crisis of the late 1990s, and the global financial crisis of 2007-2009. A fourth wave of debt began in 2010 and debt has reached $55 trillion in 2018, making it the largest, broadest and fastest growing of the four. While debt financing can help meet urgent development needs such as basic infrastructure, much of the current debt wave is taking riskier forms. Low-income countries are increasingly borrowing from creditors outside the traditional Paris Club lenders, notably from China. Some of these lenders impose non-disclosure clauses and collateral requirements that obscure the scale and nature of debt loads. There are concerns that governments are not as effective as they need to be in investing the loans in physical and human capital. In fact, in many developing countries, public investment has been falling even as debt burdens rise. The debt build-up also warrants close analysis because of slower growth during the current wave. In comparison with conditions prior to the 2007-2009 crisis, emerging and developing economies have been growing more slowly even though debt has been growing faster. Slower growth has meant weaker development outcomes and slower poverty reduction. Global Waves of Debt presents the first in-depth analysis of the similarities and differences in the post-1970 waves of debt accumulation. It also features a comprehensive examination of more than 500 individual episodes of government and private debt surges that have occurred in 100 emerging and developing economies over the past five decades. The study reports that roughly half of those debt surges ended in financial crises. The latest debt surge in emerging and developing economies has been striking: in just eight years, total debt climbed to an all-time high of roughly 170 percent of GDP. That marks a 54-percentage point of GDP increase since 2010?the fastest gain since at least 1970. The bulk of this debt increase was incurred by China (equivalent to more than $20 trillion). The rest of the increase was broad based?involving government as well as private debt?and observable in virtually every region of the world. The study shows that simultaneous buildups in public and private debt have historically been associated with financial crises that resulted in particularly prolonged declines in per capita income and investment. Emerging and developing economies already are more vulnerable on a variety of fronts than they were ahead of the last crisis: 75 percent of them now have budget deficits, their foreign currencydenominated corporate debt is significantly higher, and their current account deficits are four times as large as they were in 2007. Under these circumstances, a sudden rise in risk premiums could precipitate a financial crisis, as has happened many times in the past. Clearly, it?s time for course corrections. The study identifies several concrete steps that policymakers can take to lower the probability and severity of a crisis. Better debt management can help them lower borrowing costs and improve debt sustainability. Greater debt transparency?by governments as well as creditors?can make it easier to identify and remedy the biggest risks. By removing uncertainty, it can also help speed up investment flows. Pursuing alternatives to public debt accumulation can also help: governments should encourage private sector investment and work to expand the tax base in ways that encourage growth. Towering though it may seem, the latest global wave of debt can be managed. Across the world, interest rates are at historic lows, moderating the costs of the debt. But leaders need to recognize the danger and move countries into safer territory in terms of the quality and quantity of investment and debt?sooner rather than later.
Ketersediaan
| Call Number | Location | Available |
|---|---|---|
| Tan 336. 343 5 Kos g | PSB lt.dasar - Pascasarjana | 1 |
| Penerbit | Washington The World Bank., 2020 |
|---|---|
| Edisi | - |
| Subjek | Debt Global Waves of Debt : Causes and Consequences |
| ISBN/ISSN | - |
| Klasifikasi | - |
| Deskripsi Fisik | - |
| Info Detail Spesifik | - |
| Other Version/Related | Tidak tersedia versi lain |
| Lampiran Berkas | Tidak Ada Data |