According to the rating agency, some of the debt burden will increase due to tight financial conditions and damage from economic shocks and will not be at a manageable level. Also, the increase in loan cost will affect the ability to bear the loan.
According to Moody’s, 13 countries, including India, will have to spend more than 20 percent of their government revenue next year to pay off debt.
It said that there would be a growing confusion between debt repayment to lenders on the one hand and meeting the aspirations of the population regarding social and economic development on the other. The reason for this is that the government will have to use a part of its increased revenue for interest payment.
Moody’s said, “Our outlook on government credit for the year 2023 is negative.” Although inflation will begin to decline, food and energy prices will remain high. This will affect economic growth and increase social tension.
Global GDP (gross domestic product) growth is projected to slow to 1.7 per cent in 2023 from three per cent in 2022. Higher prices and tighter monetary policy affect consumer spending, investment and economic sentiment.
According to Moody’s, Asia will outperform other regions. Large Asian countries such as India will see a growth rate of over 4.5 per cent as domestic consumption, investment and tourism return to normal levels.
The rating agency had last week said in the Global Macro Economic Outlook for 2023-24 that global growth will slow down in 2023 and may remain sluggish in 2024 as well.
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