MENA Newswire News Desk: The Reserve Bank of India (RBI) Governor, Shaktikanta Das, has issued a stark warning about the global debt crisis, which has soared to a staggering $315 trillion, or 333% of the world’s Gross Domestic Product (GDP) in 2024. Speaking at the “Future of Finance Forum 2024” in Singapore, Das emphasized that this enormous debt burden poses a significant threat to emerging market economies (EMEs) and low- to middle-income countries. These nations are particularly vulnerable to financial instability due to their reliance on foreign capital.
Das highlighted that fiscal deficits in many countries have surpassed pre-pandemic levels, creating additional economic challenges. With 88 economies set to hold elections in 2024, he noted that opportunities for fiscal consolidation remain limited. Governments will need to carefully manage their debt levels to avoid worsening financial risks. Adding to the complexity, the RBI chief pointed to rising geopolitical tensions and ongoing supply chain disruptions, which have increased risk aversion among global investors. He warned that these factors could lead to more trade restrictions, putting additional pressure on already fragile economies.
Das underscored the need for central banks to maintain prudent monetary policies, while governments must implement proactive supply-side measures to mitigate potential fallout from the global debt crisis. Effective policy coordination, he said, will be crucial in addressing these growing challenges. He also stressed the importance of managing risks posed by financial instability and ensuring that global financial institutions work in tandem to navigate this complex environment. As nations grapple with high debt levels and geopolitical uncertainty, Das called for international cooperation to find sustainable solutions.