Rahul Jacob: Debt with a high rich world is a concern that we should all confront

Copyright © HT Digital Streams Limit all rights reserved. Rahul Jacob 5 min Read 30 Jul 2025, 12:30 pm is that central banks reduce their exposure to government debt, even if corporate debt in the OECD is blaming for a debt financing. (Reuters) Summary The OECD’s latest ‘global debt report’ has marked the global risks of debt storage in developed economies. With fiscal responsibility in many of them, the whole world may be staring at volatile times ahead. Policy reports of multilateral institutions are often an antidote to insomnia. But not the global debt report 2025 released by the OECD in March. It has features that compare favorably with a wreath of the wreath. Factoid-affactoid of the growing debt of developed world leaves the reader almost numb of concern. OECD sovereign debt climbed from $ 5 trillion ahead of the Global Financial Crisis (GFC) to $ 15.7 trillion in 2007. The culprit is partly quantitative relief, when central banks increased the money supply after the GFC. But the increase in debt on the government and corporate level seems more than a decade and a half later. These openings salvo from the summary of the report put things in context: “Sovereign Bond Issuing in OECD countries is projected to reach a record of $ 17 trillion in 2025, higher than $ 14 trillion in 2023. Emerging markets and developing economies lending from debt markets have also grown from about $ 1 trillion in 2007 to more than $ 2024. ” Also read: Doge can’t really help the US to evade its debt overload problem the fact that central banks reduce their exposure to government debt, even if corporate debt is increasing in the OECD and you make the debt financing capacity that can easily spiral in crisis. Pension funds in the West also have less total exposure to government bonds. As Philip Coggan notes in a recent article for the Financial Times, it is because employees in the West use increasingly defined contribution plans to finance pensions in which the responsibility to make investment decisions is on them. Unlike major pension funds, they tend not to invest so much in government bonds. This is increasingly dependent on foreign investors; The OECD report states that foreigners own more than a third of their government bonds. Since many developing economies know from experience, foreign investors tend to flee faster than things get tough. Also read: Debt Relief for Poor Countries: Time for a whole new attempt to make? What makes things volatile is that although the low-interest rate environment has led to excess release, over a few years many of these effects will have to mature and refinance at higher interest rates. But the bigger problem is that wise economic policy, including debt reduction, is much more difficult to continue with many populist and nativist parties and increase their support base through foreign demands on social media. In early July, the UK served as an early chronicle of turbulence in the mortgage market. After a revolt against the planned reform of well -being of its own members, the Labor Party government supported, which would have been £ 5bn in savings at the end of the decade. Prime Minister Keir Starmer faced a hostile interrogation of the opposition not to give his chancellor of the treasure trove Rachel Reeves full support. Reeves were distressed and looked like it was torn. The next day, British bond yields detected as markets speculate that Reeves were on the way. It took a renewed statement of support from the prime minister for calm. Also read: The loan of the IMF loan in Pakistan is the matter for reforming Die Stem for moods. There are broader lessons. The Starmer government was shown in May by the local election results, which rapidly showed increasing support for the reform party and anti-immigrant rhetoric. Against such a background, the necessary changes to the UK’s National Health Service (NHS) for example, or welfare benefits are becoming more difficult. Meaningful central leaders may seem dull compared to fire boards on the right that is economical with the truth about immigration, as well as the need to lower public debt. Last week, the annual report of the International Monetary Fund (IMF) on the British economy said Reeves’ rules to ward off the fiscal deficit are credible, but have warned that “in an uncertain world environment and with a limited fiscal main space, fiscal rules can be easily violated if the growth of the growth or interest rate is realized.” These conditions apply to a wealth of developed economies, not just the UK. If it wasn’t a terrifying enough background, low interest rates have encouraged strange behavior through OECD businesses until recently. “Corporations used the low-rate era to prioritize financial operations, which partly break the relationship between corporate investment and loans,” the report states. This Anodyns statement underestimates the excessive financing of economies developed in the world where corporate business companies and payments from shareholders were attracted because the cost of money was so low. “Corporations … partly broke the relationship between corporate investment and loans. It affects the ability to meet the upcoming refinancing needs,” the report states. Also read: Another IMF loan for Argentina? Its fallout can, meanwhile, be ugly, the outdated populations in the developed world contribute to the health and pension costs. Last week, the IMF called on the British government to combat pension benefits and to pay higher income earners for medical care when using the NHS. In Japan, where the Bank of Japan (BOJ) was the last central bank to leave quantitative relief, demand for government bonds under domestic banks weakened. The BOJ had to walk in to buy government bonds. The returns have risen significantly, but Japanese banks are uncertain where interest rates are heading, while those who have borrowed cheaply in Jen so far to invest elsewhere are now uncertain about this ‘transport trade’. These are inherently volatile conditions for the global economy. Sorry developing economies that need to finance high levels of debt amid such stormy weather. The author is a coin columnist and a former Financial Times foreign correspondent. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. 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