DebtTalks Episode 13. Financing growth in a challenging debt market environment
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May 6, 2025 Fatos Koc, head of the Financial Markets Unit at the OECD, joins to discuss the troubling rise in global debt, which soared by $25 trillion in 2024. He highlights the impact of rising interest rates on debt sustainability, especially for emerging markets, and contrasts the capabilities of advanced economies. The conversation also delves into the significance of green bonds and sustainable investments, addressing the need for structured capital markets to foster resilience and respond to urgent investor demands.
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Global Debt Surge Explained
- Global debt has tripled since 2007, reaching over $100 trillion in 2024.
- This surge is largely due to fiscal responses to the 2008 financial crisis and the COVID-19 pandemic.
Prioritize Growth-Enhancing Borrowing
- Governments should prioritize borrowing for public spending that enhances long-term growth and productivity.
- Fiscal consolidation, structural reforms, and efficient public spending are needed for debt sustainability.
Maturity Gap Increases Risks
- Average debt maturity for OECD countries is around eight years, reducing refinancing risks.
- Emerging markets have significantly shorter maturities, increasing their exposure to interest rate risk.