Published: Fri, April 20, 2018
Money | By Armando Alvarado

U.S. debt load ballooning, set to outpace some African countries in 5yrs

U.S. debt load ballooning, set to outpace some African countries in 5yrs

She made the remarks during an interaction with reporters at the start of the spring meeting of the global finance organisations.

The referenced Nigeria's external debt and domestic debt figures above are as at December 2017 data from Debt Management Office (DMO) showed.

Emerging markets would be especially vulnerable to "spillovers" if that happens, the report cautioned.

"Financial vulnerabilities, which have accumulated during years of extremely low rates and volatility, could make the road ahead bumpy and could put growth at risk", Bloomberg quoted the world finance body as saying.

The office also predicted that the debt held by the public will rise from 78 percent of GDP (or $16 trillion) at the end of 2018 to 96 percent of GDP (or $29 trillion) by 2028.

Lagarde added, however, that she remained concerned about the debt the United States has been taking on since Trump took office.

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Trade relations between China and the United States have deteriorated in recent weeks. He therefore advised policy makers to ensure that the post-crisis regulatory reform agenda is implemented, and should resist calls for rolling back reforms.

"The momentum behind the cyclical global expansion remains strong, but escalating trade conflicts and financial market volatility highlight downside risks beyond the next several quarters", Lagarde said. He has also insisted that China should not be allowed to flood the USA market with cheap goods while American firms do not get full access to the world's highest populated country.

So policymakers needed to more actively use their micro and macroprudential tools to address those weaknesses.

Beyond that horizon, it was more pessimistic, projecting global growth will fade as central banks tighten monetary policy, the USA fiscal stimulus subsides, and China's gradual slowdown continues. A rapid succession of rate hikes could push down stock prices and potentially hurt developing countries that have come to rely on foreign investment, she said. Both private and public debt have surged over the past decade.

But the International Monetary Fund pointed to some fragilities in global finance after a lengthy period of easy money policies and low interest rates, including a flood of high-risk bonds, record-high debt levels and lofty prices for risky assets.

Global debt hit a new record high of $164 trillion in 2016, the equivalent of 225 percent of global GDP.

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