Rising sovereign debt and borrowing costs have prompted a fresh warning from the International Monetary Fund (IMF) about risks to the fiscal health of member countries, with 24-year highs in US Treasury yields expected to become one of the focal topics for central bankers and finance ministers gathering in Bangkok this week.
The average yield on 10-year government bonds across the Group of Seven economies increased by more than 1 percentage point between February and September this year, reaching its highest level in nearly two decades, according to an IMF blog post on Wednesday.
The US, France, Japan and other advanced economies have drawn attention in recent weeks as government bond yields climbed to multi-year highs, fuelling concerns about rising debt and spillover effects on emerging markets, a theme likely to feature at the IMF-World Bank annual meetings.
“Higher borrowing costs are adding to fiscal pressures at a time of high debt, making credible consolidation more urgent,” wrote Rodrigo Valdes, chief of the IMF’s fiscal affairs department, and deputy head Era Dabla-Norris.