Govt borrowing will jump by around $4 tln in 2021 - Janus Henderson Investors
LONDON, April 19 (Reuters) - Government debt levels globally are at record levels but they have become cheaper than ever to finance, thanks in part to central bank buying, Janus Henderson Investors said in a new report released on Monday.
This year will see another big jump in government borrowing of around $4 trillion, or $768 for each of the 4.9 billion citizens in the countries covered by Janus Henderson's sovereign debt index, as COVID-19 continues to take a toll, the report said.
But servicing that debt will remain lower because of relatively low interest rates. Janus Henderson estimates that the world’s interest bill will only rise a little this year and will fall in 2022.
World governments had to pay just 2% for their loans in 2020 versus 7.6% in 1995, the report said.
In Britain, the budget deficit in 2020 was worth a fifth of the UK economy, but the country's interest bill was the lowest since 2009 and will hit a record low in 2022, Janus Henderson estimated.
Massive bond buying schemes by central banks have helped pin down borrowing costs.
According to the report, central banks owned 24% of global government debt at the end-2020 and over half of all new government borrowing last year was paid for with newly minted cash from central banks.
In emerging markets, China as a major borrower was identified as a key theme.
"China is easily the biggest contributor to the growth in debts," the report said. "In 1995 it owed just $1 in every $30 among emerging markets. Last year this had risen to $1 in every $3." (Reporting by Dhara Ranasinghe, editing by Karin Strohecker)
