Tags: Wealthy | Countries | Borrow | 10.2 Trillion | 2011

Wealthy Countries to Borrow $10.2 Trillion in 2011

Monday, 08 Nov 2010 08:28 AM

Advanced-nation governments will borrow at least $10.2 trillion in 2011, The Wall Street Journal reports.

Fifteen developed governments, including the U.S., Japan, the U.K., Spain and Greece, will need the money to make debt payments and finance budget deficits, according to the International Monetary Fund, a multilateral lending institution.

That’s up 7 percent from 2010, and equals 27 percent of their combined annual economic output.

"Aside from Japan, which has a huge debt hangover from decades of anemic growth, the U.S. is the most extreme case," the Journal reported on its website.

"Next year, the U.S. government will have to find $4.2 trillion. That’s 27.8 percent of its annual economic output, up from 26.5 percent this year. By comparison, crisis-addled Greece needs $69 billion, or 23.8 percent of its annual GDP."

So far, most of these developed economies have been able to come up with the money to finance themselves without too many problems, with Greece being the exception.

Investors could one day hesitate to lend to their respective governments, according to the International Monetary Fund.

"That’s a highly undesirable outcome — picture a financial crisis in which governments can’t step in to help, because government finances are the problem."

Today, however, a weaker dollar is helping U.S. exporters, as the government should report the trade deficit shrank to $45 billion in September from $46.3 million a month earlier, according to a Bloomberg survey.

"U.S. exports are finding a market," Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott in Philadelphia, tells Bloomberg.

"We expect the trade gap to narrow into the fourth quarter and provide a little tail wind for economic growth."

Official trade data is due Wednesday from the Commerce Department.

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Advanced-nation governments will borrow at least $10.2 trillion in 2011, The Wall Street Journal reports. Fifteen developed governments, including the U.S., Japan, the U.K., Spain and Greece, will need the money to make debt payments and finance budget deficits, according...
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2010-28-08
 

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