The world debt and its “rollover” are complicated. Not only worries the growing dependence on short -term financing but also the weight of interest and their impact on fiscal accounts.
The last report on global indebtedness of the IIF showed that in the first half of 2025 a historical record of US $ 338 billion had been reached, however, beyond the magnitude of the global figures, analysts of the “Think Tank” of international banking warned growing concerns of world markets over the level and structure of world indebtedness. In this regard, they stressed that Concern for the increase in long -term interest rates has led many countries to favor short -term emissions, which increases political pressure on central banks to reduce official interest rates.
As explained by the IIF experts, there is an increase in fiscal tensions in mature markets, which puts bond watchers in attention. “While public debt ratios increased considerably in emerging markets in the first semester, especially in Chile and China, the market reaction has been more forceful in mature markets this year. The debt needs in many advanced economies remain well above pre-pandemic levels, without indications of a significant reversal. ” In this regard, they consider that “the rise of populism, added to the frequent ministerial reorganizations and the rotation of the government, has made it easier for political leaders to make the difficult decisions necessary to correct the direction of the increase in public debt in recent years.”
But these pressures are aggravated by the increase in interest expenses, the growing costs of medical care due to demographic changes, the highest expense in defense and the growing economic losses caused by natural disasters and climate change. “All this has contributed to an increase in the costs of long -term loans in developed markets. The increase has been even more pronounced in the term interest rates of public bonds this year, which reflects the expectations that debt tensions could be intensified over time, especially in Japan and several European countries, such as Germany, France and the United Kingdom.” On the other hand, they emphasize that the costs of long -term loans have decreased slightly in the US, thanks to the continuous and solid external demand and the expectations that the increase in tariff income will help compensate for the fiscal costs associated with the law “One Big Beautiful Bill” (a great and beautiful law), although at the expense of a lower growth and greater inflation The US CBO
The dependence of short -term financing grows
In this global context, one of the greatest concerns of the markets and, therefore, of investors, is the growing dependence on short -term financing of public indebtedness, precisely, in the current era of interest rates other than zero. “While short -term debt usually represents a relatively small proportion of the total pending public debt (around 20% in the US), represents a much higher proportion of financing activity: approximately 80% of the issuance of US treasure bonds. This dependency contributes to maintaining the general figures of artificially low debt and allows governments to renew obligations to lower financing costs compared to long -term debt, ”they explain from the IIF. However, This also leaves many sovereigns more exposed to abrupt changes in investor trust and increases the risk of renewalsince debtor countries must constantly refinance their liabilities in the short term. A clear message for emerging countries such as Argentina.
There is also another concern that IIF economists detected, which is the perspective of fiscal domain: As the dependence on short -term financing increases, political pressure on central banks intensifies to maintain low rateswhich raises doubts about the preservation of the independence of monetary policy.
Can artificial intelligence help?
The authors of the Global Debt Study, Emre Tifik, Khadija Mahmood, Raymond Aycock, and Sonja Gibbs, argued if the so mentioned artificial intelligence (AI) could help in something in this problem. Therefore, they considered that a key issue, given the lack of concrete political measures to stop the drastic accumulation of public debt, including due to structural factors such as demography, was whether the adoption of AI could generate the productivity gains necessary to maintain debt ratios under control.
According to IIF economists, In the case of the US, where it is projected that the federal government debt increases at 145% of GDP by 2050, In the face of the current 100% with current policies, CBB estimates (the Congress Budget Office) suggest that an increase of 0.5 percentage points in the growth of labor and capital productivity, regardless of its origin, would reduce the projected levels of public debt of the country by more than 30 percentage points by 2050 that the broader impact of AI on productivity becomes visible, and profits could be much lower than expected unless AI is deeply integrated with other critical technologies, such as biotechnology, semiconductors, spatial computing and quantum computing, ”warns the experts.
Another fact that the IIF study contributes is that The increase in the first semester of 2025 concentrated on public debt and non -financial companies, with particularly strong indebtedness by high performance emitters in the US. In addition, as a percentage of GDP, the total global debt ratio continued to decrease slightly in the first semester, below 324%. However, sectoral tendencies diverged: public debt ratios increased even more, approaching 98% of GDP, while private sector debt ratios decreased. At the country level, the most pronounced increases in the total debt ratios were recorded in Canada, China, Saudi Arabia and Poland. On the contrary, Ireland, Japan and Norway experienced notable declines in the debt/GDP ratio.
Source: Ambito
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