Global general debt issuance hit a record high of $2.6 trillion in April

The economic impact of the coronavirus pandemic prompted governments to issue more debt than ever before in April, according to data provided by the Institute of International Finance.

The Covid-19 outbreak has meant countries have effectively had to shut down, with many governments imposing draconian restrictions on the daily lives of billions of people.

To date, confinement measures have been implemented in 187 countries or territories in an effort to try to slow the spread of the virus. The restrictions are expected to result in the worst economic shock since the Great Depression in the 1930s.

It has forced world leaders to quickly deploy emergency financial measures and usher in aggressive stimulus packages in an effort to avoid a devastating economic collapse.

The IIF’s Global Debt Monitor found that global general debt issuance (bonds and loans) hit a record high of $2.6 trillion in April, up from the previous record issuance of $2.1 trillion in March.

The U.S. government was found to have accounted for $1.4 trillion of total worldwide general debt issuance in April, and $1.2 trillion in March. The world’s largest economy has committed to the largest rescue package of any country by far.

The International Monetary Fund has said a rapid rise in global public debt could pose risks once the threat of the pandemic fades.

At the start of the year, the World Bank had warned about the intensifying risk of a fresh global debt crisis, saying the build-up of global borrowing since 2010 had been “the largest, fastest and most broad-based increase” since the 1970s.

The group had urged governments and central banks to recognize that historically low interest rates may not be enough to offset another widespread financial meltdown.

Governments issued more debt than ever last month. How worried should we be?, CNBC, May 13