Credit rating agency Fitch has forecast that Russia's war on Ukraine will raise sovereign borrowing costs and trigger a new wave of defaults.

The agency, which monitors more than 100 countries, said the war would fuel problems such as high inflation, trade disruptions and weak economies.

The agency attributed the increased borrowing to most governments having to increase subsidies or reduce taxes to reduce the impact of inflation.

She said higher interest rates would increase government debt servicing costs.

Once again, the number of countries experiencing downgrades in their credit ratings began to increase this year as the pressure mounted.

Most of the governments covered by Fitch have either brought in subsidies or implemented tax cuts;

In an effort to mitigate the impact of high inflation;

But this had its cost.

While commodity exporters will benefit from higher prices, those who have to import the bulk of energy or food will suffer.

The number of countries in the list of countries that are in default - or whose bond yields in the financial markets indicate that this has happened - is 17, which is a record level.

These countries are Pakistan, Sri Lanka, Zambia, Lebanon, Tunisia, Ghana, Ethiopia, Ukraine, Tajikistan, El Salvador, Suriname, Ecuador, Belize, Argentina, Russia, Belarus and Venezuela.


record debt

And a report - published by the International Monetary Fund website last April - stated that the world is living in a dangerous period and faces a renewed state of uncertainty, after the Russian war on Ukraine was added to the ongoing Corona pandemic and other problems that preceded this pandemic.

The report said that debt had already reached very high levels before the imposition of the general closure measures due to the Corona virus, while the unprecedented economic support for governments contributed to stabilizing financial markets and gradually easing liquidity and credit conditions in various parts of the world.

He pointed out that the war in Ukraine came to add more risks to unprecedented levels of public borrowing, at a time when the pandemic is still putting pressure on many government budgets.

According to the report, deficits and debt accumulation during the pandemic rose much faster than in the early years of other recessions, including the largest of the Great Depression and the global financial crisis.

The report says that this size is not comparable to what happened during the two world wars in the 20th century.

According to the International Monetary Fund's global debt database, borrowing jumped by 28 percentage points and reached 256 percent of GDP in 2020.

Governments contributed about half of this increase, and non-financial companies and family debts contributed to the other half of the increase, while public debt represents nearly 40% of the total global debt, the highest percentage it has reached in nearly 6 decades.