Money market

Global debt rises by 42% to $237tn

Global debt rose to a record $237tn in the fourth quarter of 2017, more than $70tn higher from a decade earlier, according to an analysis by the Institute of International Finance.

The global debt climbed by 42 per cent in the fourth quarter from a decade earlier, the report showed.

Among mature markets, household debt as a percentage of Gross Domestic Product hit all-time highs in Belgium, Canada, France, Luxembourg, Norway, Sweden and Switzerland, Bloomberg reported.

That’s a worrying signal, with interest rates beginning to rise globally. Ireland and Italy are the only major countries where household debt as a percentage of the GDP is below 50 per cent.

Still, the ratio of global debt-to-gross domestic product fell for the fifth consecutive quarter as the world’s economic growth accelerated.

The ratio is now around 317.8 per cent of the GDP, or four percentage points below the high in the third quarter of 2016, according to the IIF.

Among emerging markets, household debt to GDP is approaching parity in South Korea at 94.6 per cent.

The report did not indicate any figures on debts by African nations.

However, under President Muhammadu Buhari, Nigeria has grown its debt portfolio by N9.61tn, according to statistics from the Debt Management Office.

The DMO said Nigeria’s debt stood at N21.73tn as of December 31, 2017, while the figure as of June 30, 2015 was N12.12tn.

This means that within a period of 30 months – July 2015 to December 2017 – the country’s debt rose by N9.61tn, or 79.25 per cent.

The DMO said the composition of the debt stock as of the end of 2017 showed that external debt was 26.64 per cent of the portfolio, up from 20.04 per cent in 2016; while the domestic debt was 73.36 per cent, down from 79.96 per cent in 2016.

Further analysis showed that the domestic debt for the Federal Government was N12.59tn, while the domestic debt of the states and the Federal Capital Territory was N3.35tn.

The external debt of the Federal Government, states and the Federal Capital Territory was N5.79tn. This puts the total public debt as of December 31, 2017 at N21.73tn.

According to the DMO, the restructuring of the country’s debt mix has led to an increase in foreign debt in order to minimise the high interest rates of local debts

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