Global debt at record high, IMF warns

WASHINGTON, Oct. 5 (AFP)

Worldwide public and private debt is at an all-time high, posing a substantial impediment to
getting global economic growth back to normal, the International Monetary Fund said
Wednesday. The easy money policies of the world's top central banks has fed the problem,
stoking a private-sector credit binge in China and rising public debt in some low-income
countries, the IMF said in a new report.
Meanwhile, slow economic growth is making it hard for both companies and countries to cut
their debt burdens -- a process that can also drag on growth momentum because deleveraging
companies slow spending and investment. Without deleveraging, however, countries run the risk
of fresh financial crises that can turn into deep recessions, the IMF's Fiscal Monitor report says.
"For a significant deleveraging to take place, restoring robust growth and returning to normal
levels of inflation is necessary," the fund said.
Getting there requires governments to stimulate growth though investment, certain fiscal and
business reforms, and targeted programs to help heavily indebted companies lower their debts.
"Global debt is at record highs and rising," the IMF's Fiscal Affairs Department chief Vitor
Gaspar said.
Public and private debt -- excluding the financial sector's -- at the end of last year hit $152
trillion, with around two-thirds owed by the private sector, the report said.
Measured against the size of the world economy, it rose from less than 200 percent of global
GDP to 225 percent over the 15 years to 2015. Debt at such levels while economic growth
remains tepid heightens the risk of financial crises, Gaspar said.
"High debt levels are costly as they often end up in financial recessions that are deeper and
longer than normal recessions," he said in comments accompanying the report.
Moreover, "excessive private debt is a major headwind against the global recovery and a risk to
financial stability."
While central banks have had to cut interest rates to support the recovery from the 2008
financial crisis, that has encouraged the debt pileup, the report said.
Dealing with the problem requires governments to implement well-calibrated programs to reduce
private debt -- by cleaning up poor balance sheets of European banks and non-financial
companies in China.
"Generally, where the financial system is under severe stress," the report said, "resolving the
underlying problem quickly is critical."
 Brazilian banking strike enters 30th day
RIO DE JANEIRO, Oct. 6 (AFP)
A strike by bank workers across Brazil entered its 30th day Wednesday, with branches
shuttered for the longest stretch in a decade to force a 15 percent pay hike.
Talks were scheduled later in the day in a bid to end the deadlock and get bank branches
across Latin America's biggest country reopened for frustrated customers. "We have talks today
at 5:00 pm (2000 GMT) in Sao Paulo. We'll see what the banks do," said Rodrigo Zevzikovas,
spokesman for the Contraf-CUT union representing financial services workers.
The strikers are seeking a pay increase of almost 15 percent, in part to offset Brazil's
inflation, currently at a nine percent annual rate. Zevzikovas said the last offer rejected by
workers had been a seven percent pay increase with a one-time bonus of 3,500 reais ($1,082).
Retail bank strikes are something of a ritual in Brazil, but this is the longest-running
industrial action since 2004. According to Estadao de Sao Paulo newspaper, about 55 percent of
branches around the country are shut. Bank employees continue to receive salaries while on
strike, making work stoppages relatively painless.
"We have a strike just about every year. There's no other way to do it," said union
representative Jose Silva, 59, who was manning a picket line outside an Itau bank branch in
central Rio.
Another strike leader at a demonstration blocking a Caixa Economica do Brasil branch said
Wednesday's scheduled meeting will come "after days of paralysis without negotiations."
"We hope something will change today," the union leader, Carlos Lima, 54, said.
With 12 million people -- almost 12 percent of the workforce -- jobless and inflation
stubbornly high, these are hard times in Brazil. Silva, joined at the picket line by a colleague in a
T-shirt reading "Your only guarantee is fighting," said there'd be no backing down. "We all have
families... it gets harder and harder," he said. "People will continue as long as it takes."
Over at Caixa bank, picketers were dug in for the long haul, occupying a row of folding
beach chairs while scores of bank cashiers and managers in suits gathered for a noisy protest.
But customers would like to see that resolution come sooner than later.