Global debt pile declines but interest bill set to surge, IIF says

The world economy's debt pile continued to decline in the third quarter of this year, but the high interest rates that are deterring new borrowing will also trigger a dangerous increase in debt service costs.

Total debt declined US$6.4 trillion in the three months through September, to about US$290 trillion, the IIF said in its quarterly Global Debt Monitor published Tuesday in Washington. That drop is amplified by the surging dollar, which makes loans denominated in other currencies look smaller when they’re measured in greenbacks.

The risk now is that the cure for inflation -- interest-rate increases by central banks -- will impose a steep increase in debt-servicing costs for heavily indebted households, businesses and governments.