Covid-19 raises the world's debt to 277 trillion dollars by the end of the year

Global debt is expected to jump to a record high of $ 277 trillion by the end of the year, the Institute of International Finance said in a report on Wednesday. The governments and companies continue to spend generously in the face of the emerging Covid-19 pandemic .

The institute which includes more than 400 banks and financial institutions around the world said the debt had already ballooned $ 15 trillion this year to $ 272 trillion as of the end of September. Governments particularly from developed markets accounted for nearly half of the increase .

Total developed market debt jumped to 432% of GDP in the third quarter of the year, compared to around 380% at the end of 2019. The debt to GDP ratio in emerging markets was about 250% in the third quarter, China recorded 335%, and the global ratio is expected to reach about 365% for the whole year .

The Institute of Finance said in its report, there is dense uncertainty surrounding the way in which the global economy can pay off debt in the future without serious repercussions on economic activity.

Total US debt is heading to $ 80 trillion in 2020, the report said, up from $ 71 trillion in 2019. In the euro zone, the debt increased $ 1.5 trillion to $ 53 trillion by the end of September. On the level of developing countries, Lebanon, China, Malaysia and Turkey witnessed the largest increases in the ratios of non-financial sector debt since the beginning of the year. The decline in revenue for emerging market governments has led to more difficulties in repaying debt even as borrowing costs have fallen to record low levels around the world .

The Institute of International Finance said that about $ 7 trillion in emerging market bonds and syndicated loans will be repayable by the end of next year, about 15% of which are in US dollars .

G20 officials agreed last month to extend an initiative to freeze official bilateral debt payments until the end of the first half of 2021 and said they would consider extending it for another six months in April. The International Monetary Fund estimates that the global economy may contract 4.4 percent this year and then grow 5.2 percent in 2021 as pandemic closures and travel restrictions affect economic output