IMF sounds alert over debts in largest economies

Hindustan Times (Delhi) - - FRONT PAGE - Agency France­presse feed­back@livemint.com

WASH­ING­TON: For the first time in years the In­ter­na­tional Mone­tary Fund is op­ti­mistic about global eco­nomic growth. But it sees a new prob­lem: mount­ing debt in the world’s largest coun­tries.

“Debt lev­els are in­creas­ing in G20 economies,” To­bias Adrian, who heads the IMF’S mone­tary and cap­i­tal mar­kets di­vi­sion, said Wed­nes­day.

Among pri­vate busi­nesses in those coun­tries, lever­age is higher than be­fore the fi­nan­cial cri­sis. And the weight of debt ser­vice has also jumped in sev­eral top economies, he noted.

With cen­tral banks in the US and Europe ex­pected to tighten mone­tary con­di­tions, he said, “This poses greater risks over time from sharp in­creases in in­ter­est rates.”

In­tro­duc­ing the IMF’S new­est as­sess­ment of risk in the world’s fi­nan­cial sys­tem, Adrian noted that the ex­tremely low in­ter­est rates of the past sev­eral years have al­lowed coun­tries to bor­row eas­ily to fi­nance their re­bound from re­ces­sions.

And re­cov­ery is not yet com­plete, he noted, say­ing low rates are still needed.

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