WASHINGTON (Reuters] – The global debt reached $226 trillion last fiscal year. That is the largest single-year rise since World War Two. Global growth will also be affected by rising interest rates and weakening economic growth, said Wednesday’s International Monetary Fund.

IMF officials stated that the COVID-19 Pandemic led to global debt reaching 256% in 2020. This is an increase of 28 percent. While government borrowing made up slightly more of the $28 trillion rise, private debt among households and other non-financial entities also reached new heights.

Low interest rates enabled 90% of debt growth in advanced economies, including China. According to the IMF, debt in countries other than developing nations grew less because they had higher borrowing costs or limited funding.

Vitor Gaspar (Director of Fiscal Affairs IMF) and others stated that increased interest rates will reduce the fiscal impact, which in turn would lead to debt sustainability concerns.

According to the officials, “The risk of global interest rates rising faster than predicted and growth falling off will increase”

“A substantial tightening financial conditions could increase the pressure on highly indebted households, governments and businesses.” The public and private sector will have to both deleverage concurrently to reduce their growth potential.