Global public debt may exceed pandemic levels, warns IMF
A.SREENIVASA REDDY (ABU DHABI)Global public debt is projected to rise by 2.8% in 2025—more than double the increase recorded in 2024—pushing debt levels above 95% of global GDP, according to the International Monetary Fund (IMF)'s Fiscal Monitor, released on Wednesday. 'This upward trend is likely to continue, with public debt nearing 100% of GDP by the end of the decade, surpassing pandemic levels,' the report noted. These projections are based on the IMF's World Economic Outlook reference scenario and factor in tariff announcements made between February 1 and April 4, 2025. 'Amid substantial policy uncertainty and a shifting economic landscape, debt levels could rise even further,' the paper warned.The IMF report, authored by Era Dabla-Norris, Vitor Gaspar, and Marcos Poplawski-Ribeiro, comes against a backdrop of rising geopolitical tensions, trade disruptions, and slowing growth. 'Major policy shifts underway have heightened global uncertainty,' the authors stated. They pointed to recent US tariff measures and global countermeasures as key drivers of financial volatility and reduced growth prospects.The IMF outlined a worrying scenario: in the event of a severely adverse shock, global public debt could reach 117% of GDP by 2027—the highest since World War II and nearly 20 percentage points above current baseline forecasts.'Debt risks were already elevated,' the Fund said. The report emphasised that if economic output and revenue collections fall more sharply than anticipated—due to escalating trade frictions and geoeconomic fragmentation—debt burdens could escalate rapidly.Moreover, the IMF highlighted the consequences of rising interest rates and tighter financial conditions, particularly in emerging and developing economies. 'Tighter and more volatile financial conditions in the US may have ripple effects on emerging markets and developing economies, leading to higher financing costs,' it said.Adding to the strain are demands for increased defence spending, fiscal support for those affected by trade shocks, and declining commodity prices. The Fiscal Monitor estimated that a significant rise in geoeconomic uncertainty alone could increase public debt by approximately 4.5% of GDP in the medium term.The report called on governments to confront these fiscal risks through sound and credible policy action. 'In an uncertain and rapidly changing world, countries will need to first and foremost put their own fiscal house in order,' the IMF said. It urged nations to balance debt reduction with continued investment in social and infrastructure programmes, while adopting prudent medium-term fiscal frameworks. 'Fiscal policy should prioritise reducing public debt and establishing and widening buffers to address spending pressures and economic shocks,' the report said. For advanced economies, the IMF recommends tackling the challenges of ageing populations through pension and healthcare reforms, alongside tax base expansion. In emerging markets and low-income countries, it stressed the need to improve tax systems, implement gradual and credible fiscal consolidation plans, and pursue debt restructuring where necessary.
'Governments should focus on building public trust, ensuring fair taxation, and managing resources wisely,' the report concluded. 'By doing so, they can foster resilience and promote sustainable growth in uncertain times.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Etihad
5 hours ago
- Al Etihad
E7 Group offers to buy all outstanding warrants at Dh2.40 each
20 Aug 2025 13:34 A. SREENIVASA REDDY (ABU DHABI)E7 Group, a public joint stock company listed on the Abu Dhabi Securities Exchange (ADX), has launched a voluntary cash offer to acquire all of its outstanding warrants at a price of Dh2.40 per warrant. A circular to this effect was posted on the website of ADX. The warrants were originally issued in May 2022 as part of the company's initial public offering, and the offer period runs from August 20 until October 20, 2025. Warrants are financial instruments that entitle holders to purchase shares of a company at a fixed price within a certain timeframe. In the case of E7 Group, each warrant gives the right to buy ten shares at a price of Dh1.15 per share. However, if not exercised, these warrants will automatically expire and become worthless at 5pm on December 6, 2026, three years after the completion of the company's business company's board explained that the buyback is designed to provide warrant holders with immediate and certain value, eliminating the risk of holding an instrument subject to market volatility or the possibility of expiring without present, there are 22,937,500 outstanding warrants. The offer price of Dh2.40 compares favourably with the company's stated right, after the current period ends, to still purchase untendered warrants at a substantially reduced price not exceeding seventy-five fils per warrant.E7 Group stressed that the proposal is in the best interests of investors, as it not only delivers cash value but also simplifies its capital structure and enhances transparency, which the board said would strengthen the company's profile and support future share value. Having considered the prevailing market conditions and the financial terms of the proposal, the board unanimously recommended that all warrant holders accept the offer by submitting sell orders before the closing board also confirmed that the company will finance the offer entirely from its existing cash resources and voluntary reserves, in line with Article 242 of the Companies Law and a resolution of its general assembly that permits the transfer of amounts from the share premium account into voluntary reserves to fund warrant repurchases. For the execution of the offer, E7 Group has appointed International Securities to act on its behalf in receiving sell orders and settling cash considerations. Cash payments to warrant holders who accept will be made within two business days after completion of the relevant holders retain the right, should they choose not to accept the current offer, to hold their instruments and exercise them before the expiry date to purchase shares at the set the company has underlined that this involves the risk of the warrants becoming valueless in December 2026. By contrast, the present cash offer of Dh2.40 provides certainty of return, which the company believes is fair and compelling under current market circumstances. E7 Group is a leading business in security solutions, commercial printing, packaging, logistics, and fulfilment in the UAE, and is valued at Dh 3.23 billion based on its current share price.
Al Etihad
7 hours ago
- Al Etihad
Oil prices likely to stay steady in H2 2025, say analysts
20 Aug 2025 11:58 A. SREENIVASA REDDY (ABU DHABI)Oil prices are unlikely to experience a significant rise in the remainder of 2025, with analysts pointing to steady Russian supplies, the unwinding of OPEC+ cuts, and comfortable European stock levels as key stabilising forces. Despite persistent geopolitical uncertainty, the consensus view from the market observers is that bearish sentiment continues to weigh on oil NBD Research notes that while headlines around diplomacy and sanctions have created short-term volatility, the fundamental impact on supply has been muted.'Geopolitical developments have only managed to have brief effects on oil markets this year,' the bank's research paper said, recalling June's price spike during the Iran–Israel conflict which quickly subsided when no production was recently, Brent futures rose above $73 a barrel in late July but eased back in August as the 'prospect of more US restrictions on Russian oil exports receded'.According to the bank's Chief Economist, Edward Bell, Russian crude continues to find buyers, with a marked shift in destination rather than volume. 'Overall seaborne shipments of Russian oil have been fairly steady since the war began but there has been a material shift in their destination,' the report stated. By mid-2025, Asia was absorbing 57% of Russian exports, compared with less than 30% before the conflict, while Europe's share had fallen to about 21%.European markets, meanwhile, are hardly in need of more barrels. Emirates NBD highlights rising inventories in the Amsterdam–Rotterdam–Antwerp (ARA) hub, alongside forecasts from the IEA and OPEC showing European demand broadly flat through 2025–26. With storage rising and consumption stagnant, the case for higher prices looks the same time, OPEC+ is bringing back barrels faster than expected. The eight members who undertook additional voluntary cuts earlier this year will 'increase output by almost 550,000 barrels per day in September,' reaching their 2026 targets ahead of a result, Emirates NBD projects Brent prices to hover close to $65 a barrel in the second half, only slightly below recent averages. 'We expect prices will hold close to our forecast levels of $65/b in H2 for the balance of 2025 as inventory builds gather pace amid moderate demand growth and supply increases from OPEC+ and elsewhere weigh on balances,' Bell Sahdev, Senior Vice President and Chief Oil Analyst at Rystad Energy, echoed the view that Russian supply will remain a fixture on global markets. 'The probability of the US placing stronger sanctions on Russia is waning, with the market expecting Russian oil trade to make a comeback as a result of the peace talks,' he observed. Despite this, Sahdev cautioned against expecting prices to collapse, noting China's aggressive stockpiling. By Rystad's estimates, if China keeps buying crude at levels 10% above refinery needs, it could add 250–300 million barrels into storage this year, absorbing excess underlined that bearish pressures remain, particularly from OPEC+ unwinding 2.2 million barrels per day of voluntary cuts by September. While this suggests oversupply into late 2025, he added that 'all the increase is not going to be made to the export market,' as Middle Eastern refiners are set to raise runs to around 9.6–9.8 mbpd, partly offsetting the global factors are also contributing to a subdued outlook. US commercial inventories remain below last year's levels despite recent builds, while Canadian production will soon undergo maintenance. Brazil's Petrobras, meanwhile, faces a new pricing framework that could constrain operations. 'While it is extremely difficult to predict what happens next in the complex peace process involving Ukraine and Russia, the signals are there that oil prices are not tanking to very low levels and Russian energy will flow easily,' Sahdev concluded.
Zawya
a day ago
- Zawya
Saudi EXIM: Bolstering non-oil exports from Saudi Arabia
Saudi Export-Import Bank (Saudi EXIM) was established in February 2020. Its core mission is to promote non-oil exports from Saudi Arabia and enhance their presence and competitiveness in regional and global markets by bridging financing gaps and mitigating export risks and by building international trade partnerships. Saudi EXIM is a government agency operating under the supervision of the National Development Fund (NDF), led by the Bank's CEO, H.E. Eng. Saad bin Abdulaziz Alkhalb. Saudi EXIM offers trade finance and credit insurance for national exporters to grow their business overseas, and also provides short and medium-term financing options for Saudi exporters and international buyers of Saudi products and services. Saudi EXIM operates in line with global best practices and collaborates with commercial banks and local and international financial institutions to provide integrated financial services for export financing and insurance - facilitating trade between exporters and importers. As a member of leading international trade and economic organizations, including Aman Union, G-NEXID, and the Berne Union, the Bank strengthens its position in the global business community, credibility, and fosters confidence in Saudi exports through enhanced risk management and international collaboration. The work of the bank is closely tied to the economic diversification goals of the Saudi Vision 2030 transformation program which include increasing the total export value of the non-oil sector from 16% to 50% of GDP by 2030. Since its establishment, Saudi EXIM has been a key driver of sustainable economic growth and local content development. Over the past five years, it has extended more than USD 22 billion in credit facilities. The Bank has also secured an A+ long-term issuer credit rating for both foreign and local currencies from Fitch Ratings, with a stable outlook. In 2024, the Bank achieved a significant breakthrough in the scale and impact of its credit operations. The total value of credit facilities reached USD 8.93 billion, marking a 103% increase compared to 2023. This reflects the Bank's growing role as a key driver in enabling Saudi Arabia's non-oil exports. These facilities included USD 3.19 billion in direct export financing and USD 5.75 billion through export credit insurance programs, raising the Bank's contribution to total non-oil export credit facilities to 7.66%. This serves as a clear indicator of Saudi EXIM's expanding economic footprint in supporting global market access for Saudi products and services. To date, the Bank has signed over 70 MoUs, along with a wide range of financing and insurance agreements, as well as partnerships with international and local banks, financial and commercial institutions, global trading houses, export credit agencies (ECAs), and several relevant multilateral organizations. Milestones include partnerships with major global trading houses such as Trafigura and Glencore, a strategic reinsurance agreement with Allianz Trade to cover supply chains in over 50 countries, and a landmark letter of credit insurance agreement with SABIC — the largest of its kind in the Middle East and a regional first. The Bank launched the Bridges Initiative (Jusoor) to empower Saudi manufacturers by streamlining the import of raw materials and equipment more efficiently. This is achieved through tailored financing and insurance solutions. Covering imports from over 70 countries to support strategic industries such as mining, automotive, aviation, and renewable energy, in full alignment with the objectives of the National Industrial Strategy. The Bank remains committed to deepening collaboration through strategic partnerships and international memberships, aiming to address exporter challenges through innovative solutions while building strong commercial ties that promote mutual interests and support national development objectives.
