With decisions due from the Bank of England and the European Central Bank, we explain who is most exposed
. Those in some emerging economies have been raising interest rates for some time already; Brazil’s central bank is expected to raise rates by 1.5 percentage points after a meeting on February 2nd, its third consecutive such increase. The Bank of England is likely to deliver its second interest-rate rise a day later.
In such a scenario, the interest bill would exceed $16trn by 2026, equivalent to 15% of projected GDP in that year. And if rates were to rise twice as quickly, say because inflation persists and forces central banks to take drastic action, the interest bill could rise to about $20trn by 2026, nearly a fifth of GDP.
Start with governments. Lebanon, which already defaulted on some of its debt at the start of the pandemic, tops the list, with an interest bill of nearly half its revenues. Despite being a big exporter of oil, Nigeria’s paltry revenues only just cover its interest costs.
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