Why in the news
The OECD’s annual global debt report found bond borrowing at record heights while costs of servicing debt climbed, pressing governments and companies to invest in productive areas.
Key data
| Indicator | Finding |
|---|
| Outstanding sovereign and corporate bonds | Above $100 trillion in 2024, near 3x the 2007 level |
| Government interest bill, OECD members | 3.3% of GDP, above defence spending |
| Debt maturing by 2027 | 40% of total |
| Riskier low-income nations: debt falling due | Half within three years, one-fifth in 2024 itself |
| Cost of dollar bond borrowing | Climbed from 4% (2020) past 6% (2024); above 8% for junk-rated issuers |
Global public debt trend (USD trillion)
| Year | 2010 | 2015 | 2020 | 2023 | 2024 |
|---|
| Debt | 51 | 62 | 84 | 97 | Over 100 |
Drivers
- Large funding needs for the green transition, ageing populations and defence (e.g. Germany’s new spending package).
- Central banks have begun cutting rates, yet rates remain well above pre-2022 levels, so cheap old debt is being replaced by costlier debt.
Risks
- Since 2008, firms have used debt more for shareholder payouts and refinancing than for capital investment.
- OECD warned that costly borrowing without higher productivity could leave economies worse off.
- Emerging markets reliant on foreign-currency loans face refinancing risk and should build local capital markets.
Climate finance challenge
- Emerging markets outside China lack $10 trillion for Paris climate goals by 2050.
- If governments pay for it, debt-to-GDP could climb 25 percentage points (advanced economies) and 41 points (China) by 2050.
Exam angle
- Report by OECD: annual global debt report; bonds above $100 trillion in 2024.
- Interest cost 3.3% of GDP surpassed defence spending.