BIS sends government debt warning before important elections
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BIS sends government debt warning before important elections
LONDON (Reuters) - The Bank for International Settlements warned on Sunday that rising government debt levels amid a number of major elections this year could roil global financial markets.
Dubbed the central bankers' central bank, the BIS said the world economy was now on course for the "smooth landing" that many economists doubted when interest rates shot up, but said policymakers, especially politicians, needed to be careful.
Global government debt is already at record levels and elections ranging from the U.S. presidential vote in November, through recent ones in Mexico and South Africa, to votes in France and Britain in the coming week, all carry risks.
BIS general manager Agustin Carstens said with interest rates not about to go back to ultra-low levels and cost pressures from aging populations, climate change and rebuilding defence capabilities, economic stimulus plans and a general rise in protectionism could unsettle sensitive markets.
"They can surprise you with not much notice," Carstens said, pointing to the turbulence in Britain's markets following then Prime Minister Liz Truss' budget plans which put some pension funds at risk of collapse. "You really want to avoid that."
As well as persistent concerns over U.S. debt levels, the French debt risk premium has surged this month to its highest level since the euro zone crisis in 2022, after French President Emmanuel Macron called a snap parliamentary election being held on Sunday that could bring in a far right government.
