The OECD warns of the “time bomb” of public debt


“Debt financing is becoming more and more expensive and credit conditions have tightened,” said Mathias Cormann, Secretary General of the OECD, on Wednesday. PA Photos/PA Photos/ABACA

DECRYPTION – Slowing growth and rising interest rates can become a time bomb.

There public debt of OECD (Organization for Economic Co-operation and Development) countries has jumped 44% over the past twenty years. At this rate, if nothing is done to reverse the trajectory, it would increase by another 60% by 2040. An unsustainable trend, while growth slows and the interest cost of this debt is increasing dangerously.

“Debt financing is becoming more and more expensive and credit conditions have tightened”, underlined Wednesday Mathias Cormann, secretary general of the OECD, which brings together 38 countries, during the presentation of his new economic forecasts. These rely on a “soft landing” of the world economy, with growth of 2.9% this year and 2.7% next year, barring any new unforeseen shocks. A level “well below” of the historical average.

Read also“The world is facing a major energy shock” which will last for several years, warns the OECD

The tail of sluggish growth, high interest rates and rising financing needs seems an impossible equation for state budgets. “There…

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