New Delhi
Reserve Bank of India Governor Shaktikanta Das has raised concerns about the alarming increase in global debt, which has reached USD 315 trillion, or 333% of global GDP in 2024. Speaking at the ‘Future of Finance Forum 2024’ in Singapore on Friday, Das highlighted the significant risks this unprecedented level of debt poses, particularly for emerging market economies (EMEs) and low- to middle-income countries.
Das warned that the high debt levels, coupled with elevated interest rates, create a dangerous cycle of financial instability. He noted that this situation could severely impact both government and private-sector balance sheets, increasing vulnerability to financial crises in these economies.
The Governor also pointed out the complications brought by rising fiscal deficits, which have surpassed pre-pandemic levels. With 88 countries entering election cycles in 2024, opportunities for fiscal consolidation are limited, making effective debt management crucial to avoid worsening financial risks.
Das emphasized that geopolitical tensions and supply chain disruptions have heightened investor risk aversion and led to more cross-border trade restrictions. He called for prudent monetary policies by central banks and proactive supply-side measures by governments to address these challenges.
He advocated for a revival of multilateralism and coordinated policy actions to counteract potential economic fragmentation and reduced global growth. Das stressed the need for international cooperation and strengthened multilateral development banks (MDBs) to tackle global issues and achieve sustainable economic growth and financial stability.
