Reserve Bank Of India Governor Warns Against US$315 Trillion Global Debt Impact

Reserve Bank of India Governor Shaktikanta Das has raised concerns about the escalating global debt, which has reached an alarming US$315 trillion. This figure represents 333% of the global Gross Domestic Product (GDP) in 2024, according to a report by Asian News International (ANI) on Friday.

Speaking at the 'Future of Finance Forum 2024' in Singapore on Friday, Das underscored that this unprecedented debt level poses significant risks. Emerging market economies (EMEs) and low- to middle-income countries are particularly vulnerable to financial instability due to this surge.

Das noted that fiscal deficits have risen above pre-pandemic levels, complicating the current fiscal landscape. With 88 economies entering election cycles in 2024, the potential for fiscal consolidation is limited. Effective debt management is crucial to avoid worsening financial risks.

The governor also highlighted how ongoing geopolitical tensions and supply chain disruptions have heightened risk aversion among investors. This has led to increased cross-border trade restrictions, further complicating the economic environment.

In light of these challenges, Das emphasized the need for prudent monetary policy management by central banks. He also called for proactive supply-side measures by governments to mitigate potential fallout from these uncertainties.

"This environment of uncertainty requires prudent monetary policy management by central banks and proactive supply-side measures by governments," said Das during his speech.