By Judith Ugwumadu | 28 March 2014

Net government borrowing across developed nations is set to fall to $1.5 trillion this year, the lowest level since 2007, Organisation for Economic Co-operation and Development figures revealed today.

This represented an estimated fall of 25% from the $2trn recorded last year, the OECD’s Sovereign borrowing outlook 2014. At the height of the sovereign debt crisis in 2009, government borrowing across the 34 OECD countries was $3.3trn.

Gross borrowing is also set to fall to $10.6trn in this year from $10.8trn in 2013.

The OECD warned that the redemption profile of medium- and long-term central government debt across the group remained ‘challenging’.

For the OECD area as a whole, governments would need to refinance close to 29% of outstanding long-term debt in the next three year, the organisation said.

The report also projected that central government marketable debt as a percentage of gross domestic product would reach 77.1% in 2014, slightly up from 77% in 2013.

‘The good news... is that debt ratios of country groupings are increasing at a significantly slower pace than at the height of the crisis or even show a stabilising trend,’ stated the report.

‘Continuing volatility in global markets, combined with uncertainties about the timing of the US Federal Reserve tapering and quantitative easing exits elsewhere, will continue to pose challenges for debt managers.

‘Skilful debt management, supported by a transparent monetary exit and a prudent fiscal strategy, will be needed to avoid a return to dysfunctional markets, including higher stress in inter-banking markets and sovereign debt markets.’