The Pre-Pandemic Debt Landscape—and Why It Matters

IMF Blog, February 1, 2021

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Global debt (public plus private) reached $197 trillion in 2019, up by $9 trillion from the previous year.
The global average debt-to-GDP ratio (weighted by each country’s GDP in US dollars) rose to 226 percent in 2019, 1.5 percentage points higher than in 2018.
Many countries entered the COVID-19 pandemic with elevated debt levels, creating challenges when economic activity collapsed in 2020 and governments provided support.

2019 global public debt surpassed its 2007 level by 23 percentage points of GDP.
Drivers by income group:
- Advanced economies: public debt rose from 72 to 105 percent of GDP.
- Emerging market economies: public debt rose from 35 to 54 percent of GDP.
- Low-income countries: public debt increased by 14 percentage points to 44 percent of GDP.
Although higher debt can reduce governments’ ability to react to the COVID-19 crisis as forcefully as during the global financial crisis, lower borrowing costs recently have partially offset constraints:
- Compared to 2007, the average interest bill as a share of revenues was 0.3 percentage points lower in 2019.
Consequences:
- Many advanced economies were still able to borrow to address the crisis in the short term.
- Some highly indebted emerging market and developing economies were beginning to find it more difficult to borrow to support pandemic responses.

High and rising private debt may be a cause for concern for recovery prospects.
Historical patterns:
- In leadups to some past financial crises, private debt accumulated far faster than GDP growth, signaling vulnerability.
- Following credit booms, economic activity tends to suffer.
Potential transmission channels:
- Unsustainable private debt of households, firms, or both can lead to large-scale bankruptcies.
- Such bankruptcies might require government intervention (bailouts of critical sectors or government guarantees on private loans).
- Elevated private debt before the pandemic can reduce governments’ fiscal space while public finances are strained.

Global debt (public + private) in 2019: $197 trillion
Increase from 2018 to 2019: $9 trillion
Global average debt-to-GDP ratio in 2019: 226 percent
Change from 2018: 1.5 percentage points higher
Low-income countries total debt rise in 2019: 1.3 percentage points of GDP (driven mostly by private debt)
2019 global public debt relative to 2007: 23 percentage points higher
Advanced economies public debt: from 72 to 105 percent of GDP
Emerging market economies public debt: from 35 to 54 percent of GDP
Low-income countries public debt: increase of 14 percentage points to 44 percent of GDP
Average interest bill as a share of revenues in 2019 vs 2007: 0.3 percentage points lower in 2019

Source: The Pre-Pandemic Debt Landscape—and Why It Matters (IMF, February 1, 2021).