The Institute of International Finance indicated that the level of general government debt in emerging markets (EMs) reached a record-high of $14 trillion at the end of 2017, which is equivalent to 48% of aggregate EM GDP. It noted that government debt in EMs grew by $6 trillion since the end of 2010, with significant increases in the public debt levels of Brazil, Colombia, Egypt, South Africa and Ukraine. Also, it pointed out that government debt in Asia is largely in local currency; while 79% of public debt in Argentina is in foreign currency, followed by Saudi Arabia with 48.3% of its debt, Turkey (39%), Poland (31%) and Colombia (30.5%). Further, it said that domestic banks held 86.1% of public debt in China at the end of 2017, followed by Egypt with 52.6% of its debt, Turkey (44.2%), Bulgaria (43.7%) and Russia (42.2%). It added that foreign investors held 62.3% of general government debt in Indonesia at end-2017, followed by Peru with 60.6% of its debt, Ukraine (56.6%), Colombia (53%), Romania (52%) and Uruguay (51.1%), while they held only 3% and 6.1% of government debt in China and India, respectively. In addition, the IIF expected financing needs in Egypt and Pakistan to exceed 15% of their GDP in 2018, while it estimated that the government financing needs of Chile and Russia would be below 5% of their GDP this year. It also anticipated a record-high of $365bn in EM bonds and syndicated loans to mature in 2019, relative to $160bn and $185bn in maturing debt in 2017 and 2018, respectively. Further, it expected debt servicing on EM public debt to be equivalent to around 2% of aggregate EM GDP in the 2018-19 period, ranging from around 0.5% of GDP in Russia to over 6% of GDP in each of Brazil and Egypt.
Source: Institute of International Finance