The International Monetary Fund warns that global government debt is at its highest level since World War II. Economic growth is not enough to solve the problems, and wealthy countries must take action before borrowing costs rise.
Borrowing costs in the U.S. are at their highest level in about 24 years. The yield on 30-year U.S. Treasury bonds has risen to 5.38 percent, the highest since 2007. State borrowing costs are expected to rise sharply through 2031. Era Dabla-Norris, deputy director of the IMF's Fiscal Policy Department, says that this leaves governments with significantly less room to maneuver in their budgets.
The IMF's advice varies. Rich countries must reduce their debt and cut their budget deficits. The U.S. should save more. Europe should invest more. China should spend more. According to the Fund, poorer countries have no choice. They must cut spending.
The warning is the same as it was after the last major debt buildup: those who wait will pay more in interest and have less money left when the next crisis hits.
