The rising cost of debt is one of the consequences of tighter monetary policies aimed at curbing inflation, according to a new report on global financial stability by the International Monetary Fund. The report was presented on Tuesday at the World Bank Group and International Monetary Fund Annual Meetings in Marrakech, Morocco, from October 9 to 15. The findings show that the danger lies in the fragile financial situation of borrowers, which undermines their repayment capacity and increases the risk of insolvency. The document stresses that rising interest rates pose new challenges for governments and tighten borrowing conditions for low-income countries. However, the report estimates that sovereign debt concerns are not limited to low-income countries, but also affect advanced economies that are exposed to rising interest rates. Data shows that global debt reached $307 trillion at the end of 2Q2023. According to the same report, the debt crisis is exacerbating crises in developing countries and threatening international financial stability. Participants at the 2023 Annual Meetings of the World Bank Group and the International Monetary Fund are therefore exploring possible solutions to prevent this debt crisis from becoming a global crisis, given the significant role played by international lenders and financial markets in the indebtedness of developing countries.
Source: Agence Tunis Afrique Presse