Rich countries’ borrowing is set to hit a record high this year as they are forced to refinance debt at higher rates, the OECD has said, putting a squeeze on many governments’ spending plans.

Debt issuance across 38 industrialised countries will rise 12 per cent to $15.8tn this year, according a report published on Thursday by the Paris-based organisation. The total overtakes a previous peak reached in 2020 when governments were scrambling to support economies at the height of the coronavirus pandemic. 

The increase in issuance is largely due to a surge in bonds that need to be refinanced. Higher borrowing costs are set to push governments’ interest expenses across member countries up from 2.9 per cent of GDP last year to 3.4 per cent in 2026, according to the OECD’s estimates, adding pressure to public finances.