RIYADH — Saudi Arabia’s finance minister has highlighted concerns regarding sovereign debt, particularly emphasizing its imminent threat to global markets, especially in low-income nations.
Mohamed Al-Jadaan remarked, “We must address the pressing issue of sovereign debt globally, particularly in lower-income and emerging economies that lack the financial cushion needed to cope with market fluctuations.” He shared these insights with CNBC’s Dan Murphy on Wednesday during the Future Investment Initiative held in Riyadh.
“I hope we can find solutions in collaboration with the IMF and G20, as we stand ready to bolster the global economy in the face of shocks. However, there seems to be uncertainty among global leaders about the right approach, emphasizing the need for careful monitoring of our responses,” Al-Jadaan stated.
He began by stressing the significance of achieving a gentle economic landing as central banks work to mitigate inflation.
“We recently returned from a week of discussions at the IMF, World Bank, and G20, and there’s clear evidence of resilience in the global economy. There is a collective understanding of the importance of navigating towards a soft landing,” he noted. “The key challenge remains sovereign debt, and there’s extensive dialogue regarding the need for cooperation among institutions to devise strategies to tackle sovereign debt, particularly in poorer nations.”
This year, global public debt is projected to hit a staggering $97 trillion, prompting the United Nations to advocate for comprehensive reforms in governmental and financial frameworks worldwide.
Saudi Arabia’s Finance Minister Mohammed Al-Jadaan speaks at a panel during the Future Investment Initiative (FII) conference in Riyadh, October 25, 2023 (Photo by Fayez Nureldine/AFP) (Photo by FAYEZ NURELDINE) /AFP, Getty Images)
Fayez Nureldin | AFP | Getty Images
The United Nations noted in a June report that many African nations are facing economic downturns and ballooning debt burdens due to various global crises. The report indicated that the number of African countries with debt-to-GDP ratios exceeding 60% has surged from 6 to 27 between 2013 and 2023.
Furthermore, the costs associated with servicing this debt have hit emerging markets and developing nations particularly hard.
“The harsh reality is that for many low-income nations, debt servicing expenses are now greater than the combined costs of health care, education, and climate change initiatives,” Al-Jadaan remarked. “This situation is detrimental globally, and we must collaboratively seek solutions to address it effectively,” he added.
