Washington: The International Monetary Fund (IMF) reported that global debt reached a new high of USD226 trillion in 2020, as the world was hit by the rampant Covid-19 pandemic and a devastating recession.

In 2020, global debt increased by 28 percentage points to 256 percent of GDP, the largest one-year debt increase since World War II, according to Vitor Gaspar, director of the IMF's Fiscal Affairs Department, who wrote a blog with his colleagues on Wednesday, citing figures from the IMF's latest Global Debt Database.

Increases in debt are especially noticeable in industrialised economies, where public debt has risen from roughly 70 percent of GDP in 2007 to 124 percent of GDP in 2020. Meanwhile, according to the IMF, private debt increased at a slower rate, rising from 164 to 178 percent of GDP over the same time period. Policymakers must "find the correct mix of fiscal and monetary measures in an environment of high debt and rising inflation," according to IMF experts, as the debt spike exacerbates vulnerabilities.

Some countries, according to IMF experts, may need to adjust faster to maintain market confidence and avoid more disruptive fiscal distress, particularly those with substantial gross funding needs or exposure to exchange rate volatility. Furthermore, they underlined that the epidemic and the global finance gap necessitate robust, effective international cooperation and support for underdeveloped nations.

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