The OECD warns of the danger of a new debt crisis all over the world

After two almost back-to-back economic crises — that of the pandemic, with the blockade of the economy, and that of inflation due to the war in Ukraine — the indebtedness of the world’s major economies has skyrocketed to implement the aid plans that you now have to pay for. This is warned by the OECD (Organization for Economic Cooperation and Development), whose studies predict that this group of economies will have to face a debt maturity of more than 21 billion euros in the next three years».

In order to cope with the economic impact of the pandemic, all countries activated aid mechanisms (social, labor and business) that served to avoid a historic collapse. Later, with the Russian invasion and a sudden spike in prices, many of these plans were converted into public assistance to deal with record price increases.

But the OECD warns that this kind of action is coming to an end: “2023 marks the end of a long period of favorable financing conditions for sovereign issuers,” said its secretary-general, Mathias Cormanpointing out that the rapidly changing environment was hampered by the financial and economic effects of the war in the Ukraine. This is what the OECD warns in a report published yesterday Borrowing costs for sovereign bond issuers “more than doubled” from 2021with the average yield on government bonds (the price countries agree to pay investors for their debt) rising at the time of issue from 1.4% in 2021 to 3.3% in 2022, and looks set to rise further in the near term.

The organization points out that countries face high refinancing risks and that many governments will spend more of their budgets on debt servicing and could face greater fiscal constraints in the coming years.

The OECD clarifies that despite the fact that countries’ borrowing needs have decreased in 2022, up to 20% below the 2020 record due to the pandemic, recovery is expected this year as a result of the impact of the war.