The destruction caused by the Covid-19 epidemic, Russia’s invasion of Ukraine and the inflation crisis on the finances of the leading countries of the developed world threatens to unleash their chains. strong world tensions in the coming years Public debtin the context of rapidly rising prices interest rates and withdrawal central banks As the main buyers of books issued by governments and given the expectation that countries will have to refinance half of their books over the next three years.
In his report on “Expectations regarding the state’s indebtedness”, OECD In 2023′ published this Monday, the developed countries organization states that gross and net emissions will increase this year: Gross emissions growth of 6% this year, after a 20% reduction in borrowing needs in 2022 compared to the maximum levels reached in 2020 due to the health crisis. Net emissions are expected to increase by 4%.
The OECD also almost warns half the transferable debt (about $23 trillion) will mature (and need to be refinanced) over the next three years. And borrowing costs are almost they tripled For OECD government bonds since 2021 – due to the rise in interest rates – and “seems to increase further in the short term”. Average cost of emissions increased from 1.4% in 2021 to 3.3% in 2022.
In addition, the OECD report draws attention to the risk posed by the withdrawal of central banks, such as the European Central Bank, from the securities purchase market: “Central banks’ demand for bonds evaporated It leaves the job of meeting the large volumes of new issuances and refinancing coming in large measure to the private sector.
According to the OECD Secretary General, Mathias Corman“2023 marks the end of a long period of favorable financing conditions for sovereign issuers adapting to new realities and the rapidly changing market environment, aggravated by the financial and economic effects of Russia’s aggressive war against Russia.” Ukraine“.
All this context brings together the key components that fuel fears of a possible debt crisis in the coming years – according to the OECD – which could be particularly detrimental for developing countries as economies like the US compete with the sanctuary they provide for the world. saving. “As a result, countries are facing high risk of refinancing and many governments will spend a larger portion of their budgets on debt servicing [pago de intereses] and they may face greater financial constraints in the coming years.”
The OECD document highlights that the increase in 10-year bond interest rates since 2021 is “one of the fastest increases in recent years compared to other sustained and significant yield increases”.
Source: Informacion
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