OECD Sovereign Borrowing Outlook 2022
This edition of the OECD Sovereign Borrowing Outlook reviews the impact of the COVID-19 crisis for sovereign borrowing needs, funding conditions and funding strategies as well as outstanding debt for 2020 and 2021, and provides projections for 2022 for the OECD area. It discusses public debt management efforts to support government Environmental, Social and Governance (ESG) agendas through investor relations and ESG-labelled sovereign bonds, and identifies strategic challenges and key elements of good practices in light of country experiences. It also examines the recent developments and trends in debt issuance by governments of emerging market and developing economies, and presents various challenges, priorities and opportunities for sovereign debt management in these economies.
Sovereign borrowing outlook for OECD countries
Following the record rise in 2020, OECD government funding needs stabilised in 2021, although they remained higher than in the pre-COVID period. The cost of government funding has increased slightly from historically record lows, as economies recovered and monetary policy stances become less supportive. Although the strong economic recovery in 2021 has somewhat eased the government debt burden, it remains at record high levels in many countries and the legacy of the crisis casts a long shadow on public finances.This chapter assesses the impact of the pandemic on sovereign borrowing needs and outstanding debt for 2020 and 2021, and provides projections for 2022. It highlights the benefit of lengthening portfolio duration during low interest rates and maintaining issuance flexibility through the use of a variety of different securities to manage high financing needs. This chapter also points to the risk and policy challenges arising from high refinancing needs, rising inflation and interest rates, changing patterns of investor demand and uncertainties around the projected level of borrowing requirements.