Global debt exceeded $365 trillion — CNBC Top News

Global debt rose by $10 trillion in the first half of the year and exceeded $365 trillion, according to a study by the Institute of International Finance (IIF). The organization warned that governments have found themselves in a vicious circle: large budget deficits are combined with rising debt-servicing costs, while political will to address the problem is lacking.

CNBC reports on the IIF data. According to the institute, ever-higher costs of servicing accumulated debt pose a serious risk to governments around the world.

Pressure on the largest economies

Yields on medium- and long-term government bonds in a number of the world's largest economies have reached their highest levels in more than a decade. These include the United States, Japan, France and the United Kingdom. Rising yields reflect investors' concerns about higher interest rates, persistent pressure from energy costs, weak economic growth and significant government spending.

The IIF noted that these four countries have persistently large deficits and increasingly high interest expenses — problems that were previously mostly associated with emerging-market countries and debt difficulties.

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Interest expenses

According to IIF calculations, advanced economies paid more than $3.3 trillion in interest last year on government bonds traded on international markets. This is more than total global spending on artificial intelligence — $2.6 trillion, defense — $3.1 trillion, or clean energy — $2.3 trillion.

The IIF said that debt has become a political issue and creates a cycle involving elections, short-term decisions and long-term vulnerability. The organization also indicated that as benchmark rates rise, interest expenses will increase, while structural problems related to healthcare spending and public pensions remain largely unresolved.

The Organisation for Economic Co-operation and Development called for curbing and reallocating public spending, improving public-sector efficiency and strengthening budget revenues. IMF Managing Director Kristalina Georgieva stressed the need to reduce debt, prioritize fiscal consolidation and ensure that central banks fulfill their price-stability mandate.