IMF highlights Saudi Arabia’s economic gains and Vision 2030 progress in latest review

RIYADH: Global public debt rose to an all-time high of $102 trillion in 2024, representing a 7.36 percent increase compared to the previous year, according to a leading UN body.

Nearly one-third of this total — or $31 trillion — is owed by developing nations, UN Trade and Development said in its publication “A World of Debt 2025.”

The debt figure rose from $97 trillion in 2023 and $90 trillion in both 2021 and 2022, underscoring the continued acceleration in sovereign borrowing. 

The data arrives just months after the International Monetary Fund forecast a sharper rise in debt levels, projecting a 2.8 percentage point increase in 2025, pushing global public debt above 95 percent of gross domestic product. 

In its report, UNCTAD stated: “Public debt can be vital for development. Governments use it to finance expenditures, protect and invest in their people and pave the way to a better future.”   

It added: “However, when public debt grows excessively or its costs outweigh its benefits, it becomes a heavy burden. This is precisely what is happening across the developing world today.”  

Public debt hitting developing nations  

UNCTAD’s report highlights that public debt in developing countries has grown twice as fast as in advanced economies since 2010. 

Regional debt distribution shows Asia and Oceania account for 24 percent of the global total, followed by Latin America and the Caribbean at 5 percent, and Africa at 2 percent. 

“The burden of this debt varies significantly based on the price and maturity of the debt finance countries have access to, and is further exacerbated by the inequality embedded in the international financial architecture,” said UNCTAD.  

The report further noted that developing countries are now facing a high and growing cost of external public debt, with half of these nations paying at least 6.5 percent of export revenues to service external debt in 2023. 

Developing countries spent $487 billion on external public debt service during that 12-month period.

Additionally, half of developing nations are allocating at least 8.6 percent of their public revenues to servicing external debt — nearly double the 4.7 percent recorded in 2010. 

“This situation leaves fewer public resources available for investments in human capital and sustainable development, and is exacerbated by deteriorating global economic prospects that undermine revenue collection,” said UNCTAD.  

Net interest payments on public debt in developing countries reached $921 billion in 2024, marking a 10 percent increase from the previous year. 

UNCTAD said the pressure of interest payments is especially pronounced in Africa and Latin America and the Caribbean, where at least half of the countries allocate a double-digit share of their public revenues to interest. 

A record 61 developing countries allocated 10 percent or more of their revenues to interest payments in 2024. 

Between 2021 and 2023, Africa spent $70 per capita on interest, exceeding the $63 per capita on education and $44 per capita on public health. 

In Latin America and the Caribbean per capita spending on interest reached $353, slightly below the $382 per capita on health and $403 on education. 

Resource outflows deepen challenges 

Developing nations experienced a net resource outflow for the second consecutive year. 

In 2023, they paid $25 billion more to external creditors in debt servicing than they received in fresh disbursements, resulting in a negative net resource transfer. 

A total of 51 developing countries experienced net outflows of debt finance, nearly twice as many as in 2010, with most of the affected nations located in Africa and Asia and Oceania. 

“The impact of these trends on development is a major concern, as people pay the price. Persistently high interest rates, weak global economic prospects and heightened uncertainty are having a direct impact on public budgets,” said UNCTAD.  

The UN body added that interest payments are growing faster than critical expenditures on health and education. 

“In many developing countries, the need to service existing obligations is constraining spending in other key areas essential for sustainable development. Overall, a total of 3.4 billion people live in countries that spend more on interest payments than on either health or education,” added the report.  

It continued to say that high interest rates, weak global growth and rising uncertainty are squeezing public budgets. 

“The consequences are direct and devastating, as people — especially vulnerable populations — pay the price,” said the report. 

In April, the IMF warned that debt levels could exceed risk estimates for 2024 if revenues and output fall more than expected due to weakened growth and rising trade tensions. 

It also flagged that geoeconomic uncertainties could fuel further debt risks, especially via increased defense spending. 

In its latest report, UNCTAD added that borrowing costs of most developing countries far exceed those of developed nations.  

“Developing regions borrow at rates that are two to four times higher than the US. This increases the resources needed to pay creditors, making it more difficult for developing countries to finance investments while preserving their debt sustainability,” said UNCTAD.  

Reformatory measures 

UNCTAD emphasized that developing nations should not be forced to choose between debt servicing and public welfare. 

Underscoring the necessity to reform the international financial architecture, UNCTAD said that the economic system should be more inclusive and development-oriented, adding that developing nations should enhance the availability of liquidity in times of crisis.  

“This can be achieved through enhanced use of Special Drawing Rights, temporary suspension of IMF surcharges, greater access to IMF emergency financing windows linked to countries’ quotas, and increased use of regional financial arrangements and South-South regional financial cooperation,” said the report.  

Developing countries should also work to develop an effective debt workout mechanism that addresses current deficiencies.  

Highlighting the importance of global coordination, UNCTAD added that it is necessary to provide more and better concessional finance and technical assistance to support countries in tackling the high cost of debt.  

“The world has long been talking about reform. It is time to move from conversation to action,” said UNCTAD.  

In June, the World Bank echoed this sentiment, calling for radical debt transparency among developing countries and creditors. 

The bank urged countries to introduce legal and regulatory reforms that mandate full disclosure when signing new loan contracts, to help stave off future crises.

SINGAPORE: Oil futures were little changed on Wednesday as markets weighed expectations from more supply from major producers next month, a softer US dollar and a mixed bag of economic and market indicators from the US, the world’s largest oil consumer.

Brent crude slipped 4 cents to $67.07 a barrel at 9:18 a.m. Saudi time, while US West Texas Intermediate crude fell 9 cents to $65.36 a barrel.

Brent has traded between a high of $69.05 a barrel and low of $66.34 since June 25, as concerns of supply disruptions in the Middle East producing region have ebbed following the ceasefire between Iran and Israel.

Weighing on prices, sources said American Petroleum Institute data late on Tuesday showed US crude oil inventories rose by 680,000 barrels in the past week at a time when stockpiles typically draw amid the summer demand season.

“Today’s oil price moves are being pushed by the interplay of potentially rising OPEC+ supply, confusing US inventory signals, uncertain geopolitical outlook, and macro-policy ambiguity,” said Phillip Nova senior market analyst Priyanka Sachdeva.

However, planned supply increases by the Organization of the Petroleum Exporting Countries and its allies including Russia, know as OPEC+, appear already priced in by investors and are unlikely to catch markets off-guard again imminently, she added.

Four OPEC+ sources told Reuters last week the group plans to raise output by 411,000 barrels per day next month when it meets on July 6, a similar amount to hikes agreed for May, June and July.

The market is already seeing the results of the previous OPEC+ increases with Saudi Arabia, the world’s biggest oil exporter, lifting shipments in June by 450,000 bpd from May, according to data from Kpler, its highest in more than a year.

“With geopolitics at bay for now, oil futures (are likely) to trade within a tighter range this week, as global economic concerns persist, with an ‘easing dollar’ as the only exception to extend any upward traction,” said Sachdeva.

The greenback fell to a 3-1/2-year low against major peers earlier on Wednesday and a weaker dollar would support prices as its could spur demand for buyers paying in other currencies.

US non-farm payrolls data due on Thursday will shape expectations around the depth and timing of interest rate cuts by the Federal Reserve in the second half of this year, said Tony Sycamore, analyst at IG.

Lower interest rates could spur economic activity which would in turn boost oil demand.

Official US oil stockpile data from the Energy Information Administration is due Wednesday at 5:30 p.m. Saudi time.