RIYADH — Saudi Arabia’s finance minister says the country’s debt is the main threat to markets in the near term, expressing particular concern about low-income countries and what he calls fast-growing global fragmentation.
“I think globally, the serious issue we need to focus on is the issue of sovereign debt, particularly in low-income countries and emerging economies, which do not have the fiscal buffers to deal with market disruptions,” Mohammed Al-Jadaan said in Riyadh on Wednesday told CNBC’s Dan Murphy of the Future Investment Initiative.
“Hopefully the IMF and the G20 can find solutions and we will be ready to support the world economy if there is a shock in this area, but as global leaders we need to focus on this area. Of course, this does not make us feel surprise.”
Jardan earlier in the conversation noted the importance of achieving a soft landing for the economy as the central bank attempts to control inflation.
He said: “We set out from Washington two days ago, after a week of meetings between the International Monetary Fund, the World Bank and the Group of 20, and I think there is a clear recognition that the world is actually proving to be resilient. “There’s been a lot of discussion around steering a soft landing, and that’s very important. The key challenge is really sovereign debt, and a lot of the discussion last week was about making sure that the three agencies work together to find a solution for sovereign debt, especially the low. Sovereign debt of income countries.”
Global public debt will reach a record $97 trillion in 2023prompting the United Nations to call for urgent reforms to governments and financial systems around the world.
Saudi Finance Minister Mohammed al-Jadaan attends a panel discussion at the annual Future Investment Initiative (FII) conference in Riyadh on October 25, 2023. (Photo by Fayez NURELDINE/AFP) (Photo by FAYEZ NURELDINE/AFP via Getty Images)
Fayez Noureddin | AFP | Getty Images
Particularly in Africa, the United Nations wrote in a report in June, “Economies are faltering after multiple global crises, resulting in even higher debt burdens.” Africa’s debt-to-GDP ratio exceeded 60% between 2013 and 2023 The number of countries has more than quadrupled, from 6 to 27. The report stated.
Debt servicing has also become more expensive, hitting emerging markets and developing countries harder.
“I think the painful truth is that many low-income countries’ current debt-servicing costs are actually higher than their health care, education and climate action combined,” Jardine said on Wednesday.
“This is not good for the world and we need to make sure we find a solution. Hopefully we will find a solution and we are working together globally to achieve that solution.”
