This report from the forthcoming 2018 edition of the OECD Sovereign Borrowing Outlook examines net and gross sovereign borrowing in OECD countries from 2008 to 2018. It first looks at net and gross borrowing needs of OECD governments in the context of fiscal developments. It then considers recent trends in central government marketable debt in the OECD area and central government debt ratios for groups of selected OECD countries. Finally, the report examines recent changes in sovereign debt credit quality in OECD countries and provides a brief discussion of potential challenges facing sovereign funding under stressed conditions.

Key findings

• Sovereign debt across the OECD area has been rising significantly since the financial crisis, albeit at a slower pace in recent years compared to the period of 2008-2012. Looking ahead, OECD governments are expected to borrow approximately USD 10.5 trillion from the markets in 2018, similar to 2017.
• In line with the borrowing figures, central government marketable debt is expected increase slightly from USD 43.6 trillion in 2017, to around USD 45.0 trillion in 2018. This pattern reflects the continued expansionary stance of fiscal policy in major OECD countries in recent years.
• While total borrowing requirements for the OECD have been stable, sovereign debt burdens remain at elevated levels of over 70% in the OECD area. The 2018 outlook for central government debt-to GDP ratio is projected to be 73%, modestly lower than 2017 mainly owing to robust economic growth expectations.
• Market conditions have been favourable over much of the period, generally with low interest rates and low volatility, and this has helped facilitate funding of elevated gross borrowing needs. Extended debt maturity profiles and strong growth outlooks mean that downside risks in the short-term are limited but refinancing risks in sovereign debt may pose significant challenges in the long term if market conditions deteriorate.