RIYADH — National debt poses a significant threat to markets in the near future, according to Saudi Arabia’s finance minister. Mohammed Al-Jadaan expressed particular concern about lower-income countries and the rapidly growing global fragmentation. He highlighted the importance of monitoring sovereign debt issues, especially in emerging economies that lack fiscal buffers to address market disruptions. Al-Jadaan emphasized the need for global leaders to stay vigilant and ensure that sovereign debt challenges do not catch them off guard.
During an interview with CNBC’s Dan Murphy at the Future Investment Initiative in Riyadh, Al-Jadaan stressed the significance of achieving a soft landing for economies as central banks navigate inflation management. He mentioned discussions held in Washington with the IMF, World Bank, and G20, where there was a consensus on the resilience of the global economy. The focus was on steering towards a soft landing, with sovereign debt emerging as a key challenge that requires collaborative efforts among the three institutions, especially for low-income countries.
Global public debt reached a record $97 trillion in 2023, prompting urgent calls from the United Nations for reforms in governments and financial systems worldwide. The UN highlighted the increasing debt burden in Africa due to faltering economies following global crises. The report noted a significant rise in the number of African countries with debt-to-GDP ratios exceeding 60%, from 6 to 27 between 2013 and 2023. Repayment of debt has become more costly, particularly affecting emerging market and developing countries.
Al-Jadaan pointed out that many low-income countries are now spending more on debt service than on essential sectors like healthcare, education, and climate action combined. He emphasized the need to find a solution to this situation, underscoring the collective global efforts underway to address the challenges posed by escalating debt burdens.
