Turkey, Saudi and other emerging markets take on $4.5trn of debt

Alamy via Reuters Connect

Emerging markets took on $4.5 trillion of debt last year, according to the Institute of International Finance, and Saudi Arabia and Turkey were among the biggest borrowers.

Global debt increased by nearly $7 trillion to $318 trillion in 2024, the highest figure on record, the Washington-based institute said in a report shared with AGBI.

Emerging markets – and primarily China, India, Saudi Arabia and Turkey – accounted for 65 percent of the total, it said.

That $4.5 trillion is equivalent to 245 percent of combined emerging markets’ gross domestic product.

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The institute, a trade group for financial services businesses with about 400 members, said it was not expecting “major debt strains in the near term”.

However, it added: “Many emerging markets have experienced a marked deterioration in their debt-carrying capacity in recent years, as the growth differential between emerging markets and mature economies has become less pronounced.” 

Emerging markets will need to roll over a record $8.2 trillion in debt this year, with around 10 percent of it denominated in foreign currency, it said. 

The institute pointed to “heightened trade tensions and the Trump administration’s decision to freeze US foreign aid” saying it “could trigger significant liquidity challenges and curb the ability to roll over and access to foreign exchange debt”. 

Jadwa Investments estimates that Saudi public debt reached SAR1.2 trillion ($320 billion) at the end of 2024. This is expected to rise to about SAR1.3 trillion by the end of this year as the country borrows to finance its budget deficit.

Riyadh-based Jadwa said the expected increase would boost the debt-to-GDP ratio from about 29.3 percent at the end of 2024 to 29.9 percent.