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Source: Reuters

Global sovereign debt to hit $49.5 trln-Moody's

Published: 24 Nov 2009 13:32:51 PST

NEW YORK, Nov 24 - Global sovereign debt is expected to hit $49.5 trillion by year end, a 45 percent climb since 2007 as the credit crisis takes a toll, Moody's Investors Service said on Tuesday.

The expected $15.3 trillion increase in worldwide government debt is more than 100 times the inflation-adjusted cost of the Marshall plan, Moody's said in a report.

The Marshall Plan, a U.S. effort to rebuild Western Europe after World War II, cost an estimated $13 billion in unadjusted dollars.

Sovereign debt ballooned during the global credit crisis as countries funded massive bailouts, shifting risk from corporate to government balance sheets.

"Not surprisingly, the G7 countries account for 78 percent of the increase, as their fiscal accounts have been hit hardest by the crisis," Jaime Reusche, associate analyst in Moody's sovereign risk group, said in the report.

The G7 or group of seven major industrial nations are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

Moody's said it expects global government debt to total 80 percent gross domestic product in 2010, up from a 10-year low of 63 percent in 2008.

Debt will also be less affordable, as measured in terms of interest payments relative to revenue, Reusche said.

For advanced industrial countries, interest payments are expected to total 6.1 percent of revenues in 2010, up from 4.3 percent in 2007.

"As growth turns negative in 2009 for most countries, the relative debt load becomes harder to bear," Moody's said.

In the United States, government debt is expected to rise to $14.48 trillion in 2010 from $12.29 trillion in 2009 and $10.27 trillion in 2008, the Moody's report said.

(Reporting by Dena Aubin) (

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