Global gov’t borrowing to hit record USD 12.3 tn in 2025 -S&P Global

Global government borrowing is on track to hit a record USD 12.3 tn in 2025, driven by rising defense spending, higher debt-servicing costs, and ongoing fiscal pressures, S&P Global forecasts. Total sovereign debt stock is expected to reach USD 76.9 tn, with global debt levels at 70.2% of GDP — slightly below pandemic highs but still elevated at a time when economies are forced to reckon with “crisis after crisis,” the Financial Times quotes Roberto Sifon-Arevalo, global head of sovereigns at S&P, as saying.

Top borrowers: The US is set to issue nearly USD 4.9 tn in long-term debt this year, driven by “wide fiscal deficits, high interest spending, and substantial debt refinancing requirements.” While the USD’s reserve currency status gives the country “significant flexibility” to manage its debt, S&P’s Roberto Sifon-Arevalo warned that rising borrowing costs are making that harder. It “was fine and sustainable… before the pandemic, now it presents a much bigger problem,” he said.

China, the second-largest borrower, is increasing issuance by over USD 370 bn to USD 2.1 tn to support its struggling economy. Outside the G7 and China, global borrowing is expected to remain broadly stable, S&P said.

Investor concerns are growing, with bond giant Pimco planning to cut exposure to long-dated US debt over “debt sustainability questions,” while b’naire investor Ray Dalio has warned the UK could fall into a “debt death spiral” as borrowing outpaces confidence.

Bigger fiscal risks: As debt-servicing costs climb, governments face increasing constraints on infrastructure and social spending, fueling a global shift toward more fiscally conservative political movements, Sifon-Arevalo is quoted as saying.

ALSO WORTH KNOWING ON PLANET FINANCE-

Saudi Aramco cut its 4Q 2024 dividend — the world’s biggest dividend — to SAR 80.1 bn (USD 21.4 bn), a 31% y-o-y cut and well below the analyst expectation of a stable payout of SAR 116.5 bn (USD 31.1 bn), according to a disclosure to Tadawul. This includes a SAR 79.3 bn (USD 21.14 bn) base dividend, up 4.2%, and a performance-linked dividend of just SAR 0.82 bn (USD 0.22 bn), down 98%.

Aramco will slash its 2025 dividend to SAR 320.4 bn (USD 85.4 bn), from USD 124 bn, citing financial strain from high payouts and weak oil prices, Bloomberg reports.

The dividend cut comes as Saudi Arabia looks to recalibrate spending as it faces rising bills for gigaprojects like Neom. The Kingdom’s budget deficit is expected to widen 4% of GDP from 2.8% in 2024, Reuters quotes Abu Dhabi Commercial Bank Chief Economist Monica Malik as saying.

Market reax: Saudi Aramco’s shares dipped 2% on the news to SAR 26.85, their lowest since August 2024. Aramco’s market value stands at USD 1.74 tn, making it the world’s sixth-most valuable company, behind Apple, Microsoft, Nvidia, Amazon, and Google parent firm Alphabet.

MARKETS THIS MORNING-

Asian markets are mostly in the green this morning, after China set its GDP growth forecast at 5%. Mainland China’s CSI 3000 Index rose 0.1%, while Hong Kong’s Hang Seng is up 0.3%. On the other hand, Japan’s Nikkei and Topix are both down in early trading. Over on Wall Street, futures rose slightly after another day of losses, with the Nasdaq inching dangerously close to correction territory.

THE CLOSING BELL-

The EGX30 fell 0.7% at yesterday’s close on turnover of EGP 3.1 bn (11.6% below the 90-day average). Local investors were the sole net buyers. The index is up 3.4% YTD.

In the green: Rameda (+2.6%), Orascom Development Egypt (+2.0%), and Orascom Construction (+1.9%).

In the red: Beltone Holding (-4.2%), Ibnsina Pharma (-1.9%), and Egypt Kuwait Holding (-1.9%).

CORPORATE ACTIONS-

Qatar National Bank will distribute a dividend of EGP 1.5 per share for its 2024 earnings starting 20 March, according to an EGX disclosure (pdf).