According to the fund's updated figures, government borrowing accounted for slightly more than half of this increase, as the global public debt to GDP ratio climbed to a record 99 percent.
The IMF attributed the surge in global debt to countries’ need to protect people’s lives, preserve jobs, and avoid a wave of bankruptcies due to the pandemic.
Egypt’s gross public debt to GDP ratio stood at 91.4 percent in 2021, according to the IMF.
Global private debt from non-financial corporations and households also recorded new highs.
The IMF noted that advanced economies and China accounted for more than 90 percent of the $28 trillion debt surge in 2020.
“These countries were able to expand public and private debt during the pandemic, thanks to low interest rates, the actions of central banks (including large purchases of government debt), and well-developed financial markets,” the IMF noted.
Emerging markets, excluding China, and low-income countries represented a small share of the debt hike with around $1-$1.2 trillion each, driven mainly by higher public debt, added the IMF.
The IMF explained that emerging markets and low-income countries are facing elevated debt ratios driven by the large drop in nominal GDP in 2020.
“Public debt in emerging markets reached record highs, while in low-income countries it rose to levels not seen since the early 2000s, when many were benefiting from debt relief initiatives,” the IMF elaborated.
Debt surge constrains governments' ability to support recovery and the capacity of the private sector to invest over the medium term, the fund pointed out.
“Monetary policy is now appropriately shifting focus to rising inflation and inflation expectations. While an increase in inflation, and nominal GDP, helps reduce debt ratios in some cases, this is unlikely to sustain a significant decline in debt. As central banks raise interest rates to prevent persistently high inflation, borrowing costs rise. In many emerging markets, policy rates have already increased and further rises are expected. Central banks are also planning to reduce their large purchases of government debt and other assets in advanced economies—but how this reduction is carried out will have implications for the economic recovery and fiscal policy,” the IMF stated.
The IMF figures showed that Africa’s debt to GDP ratio recorded 65.4 percent, the Middle East 45 percent, and North Africa 81.2 percent in 2021.
In October, the IMF projected Egypt’s debt to GDP ratio to descend as of 2022 to record 89.5 percent, 78.2 percent in 2025, and 74.1 percent in 2026.
It predicted Egypt’s general government net debt to jump to 83.5 percent of GDP in 2021, up from 79.2 percent in 2020.
The government’s net debt to GDP ratio is expected to commence its downturn in 2022 to reach 82.2 percent, 78.8 percent in 2025, and 68.2 percent in 2026, according to the report.