IIF says white elephants in emerging economies major reason behind debt

As the debt of the world has been expected to exceed a level of $257 trillion in 2020’s first quarter the IIF or the Institute of International Finance has sent out a warning about the white elephants in the markets which are emerging may pose a major problem.

The debt of the world had hit by $253 trillion by September end in the year 2019 with the interest rates being lower and making it easier for the governments, corporates as well as the individuals for borrowing.

The debt of the world in comparison to the total output had surpassed a level of 322% in 2019’s third quarter and it is going to see growth continuously as per the latest report of the IIF.

The CEO and President of IIF has said that in a major run-up in the debt and leverage for this cycle no matter if its mature or emerging markets or households, corporates or sovereigns and the rates of interest haven’t moved so the markets are giving an indication of having a lot more capacity but he was worried about the situation in any way. He said so at the World Economic Forum which is going on in Davos this Thursday.

Adams in particular had highlighted that the $8 trillion of foreign denominated debt was still outstanding from the markets which were emerging and of that $2 trillion is going to have to be rolled over in the year.

This is a major issue though a lot of the debt is due to the real estates on the enterprises which are masquerading as the corporates. They are trying to address how they are going to pay the debt back in time and if they are going to go into the balance sheets of the sovereigns.