London, April 5 / BNA / Standard & Poor’s credit rating agency said in a report that global sovereign borrowing will reach $10.4 trillion in 2022, nearly a third above the average before the coronavirus pandemic.
The rating agency said in an annual note that despite the economic recovery, borrowing would remain high due to high debt renewal requirements and the war in Ukraine.
Standard & Poor’s said that while 137 countries will borrow the equivalent of $10.4 trillion in 2022, 30 percent less than in 2020, the total number is a third higher than the average borrowing between 2016 and 2019.
Standard & Poor’s analysts said, “Tighter monetary conditions will raise government financing costs.”
“This will pose additional difficulties for governments that have not been able to resume growth, reduce reliance on foreign currency financing, and where interest bills are already high on average.”
Standard & Poor’s said in an accompanying report on Thursday that borrowing in the emerging economies of Europe, the Middle East and Africa (EMEA) will rise $253 billion to the equivalent of $3.4 trillion by the end of the year.
Standard & Poor’s analysts have predicted that Egypt, which recently sought IMF assistance, is set to overtake Turkey as the largest issuer of sovereign debt in the region, with bond sales worth $73 billion.
Analysts said that among the major countries globally, Kenya, Egypt and Japan have the largest share of debt to be renewed this year, noting short-term debt at 26% and 30% of the total debt stocks in Egypt and Kenya, respectively. .
Commercial debt in emerging markets in Europe, the Middle East and Africa is set to rise to 37% of GDP from 31% in 2016, buoyed by pandemic-related costs, increased commercial borrowing in Oman and Saudi Arabia and “permanently high fiscal deficits” in Egypt and Romania.
Across emerging markets, JPMorgan analysts said in a note on Monday that the corporate default rate could reach 8.5% this year, the highest since the global financial crisis.