LONDON: Falling interest rates have fuelled a fresh borrowing bonanza in the first quarter of 2019 with emerging market (EM) debt soaring to record highs and the global debt stock bulging by $3 trillion, an Institute of International Finance (IIF) report showed on Monday.

Debt owed by governments, companies, financial institutions and households across developing economies soared to $69.1tr or 216 per cent of gross domestic product from $68.9tr a year earlier.

Debt-to-GDP ratios had risen at the fastest pace in Chile, Korea, Brazil, South Africa, Pakistan and China over the past year, the IIF found.

“The persistent economy-wide increase in EM borrowing continues to feed into higher contingent liabilities for many sovereigns,” IIF Deputy Director Emre Tiftik wrote in a note.

“Growing reliance on short-term debt leaves many emerging markets exposed to sudden shifts in global risk appetite,” Tiftik said, adding some $3tr of emerging market bonds and syndicated loans are coming due through end-2020 — a third of which were US dollar denominated.

Published in Dawn, July 16th, 2019