Global Public Debt Soars to Record-High of $92 Trillion

Global Public Debt Soars to Record-High of $92 Trillion

Ira Singh
14 July’23

In a recent report released by the United Nations (UN), it has been revealed that global public debt has reached an unprecedented level, skyrocketing to a staggering $92 trillion. The alarming figures signify a significant burden on nations across the world, posing a formidable challenge to economic stability and development.

The report highlights that the surge in public debt is primarily driven by the economic repercussions of the COVID-19 pandemic. Governments worldwide resorted to massive spending measures and economic stimulus packages to mitigate the devastating impact of the crisis. As a consequence, public debt has surged to levels never witnessed before.

Additionally, the report highlights a concerning trend of domestic and external debt growing more than fivefold in the past two decades, outpacing economic growth. In contrast, global GDP has only tripled since 2002. This raises doubts about the sustainability of such borrowing practices and their potential long-term impacts on the global economy.

Over 30 percent of global public debt is attributed to developing countries, with China, India, and Brazil accounting for 70 percent of that share. Among the developing nations, fifty-nine of them possess debt-to-GDP ratios exceeding 60 percent, indicating worrisome levels of debt, according to sources.

UN Secretary-General Antonio Guterres has expressed concern about the impact on people, despite current market conditions appearing unaffected. Some of the world’s poorest nations are faced with a difficult choice between servicing their debts or meeting the needs of their citizens.

Moreover, the UN reports that the international financial architecture has made access to credit for developing nations inadequate and costly. The fact that net interest debt payments exceeds 10 percent of revenues in 50 emerging economies provides evidence of this.

The UN is recommending that multilateral lenders, such as the IMF, enhance the accessibility of financing for countries facing debt distress. Additionally, the organization advocates for the establishment of a global debt workout mechanism. However, specific details regarding the workings of such a mechanism have not yet been disclosed, according to recent updates.

The report also stresses the significance of targeted investments in sectors such as healthcare, education, and climate change mitigation. By prioritizing these areas, governments can lay the foundation for long-term economic growth, reduce inequality, and create resilient and sustainable societies.While the challenges posed by the record-high public debt are formidable, the report highlights that concerted global efforts can help countries navigate this crisis. International cooperation, policy coordination, and innovative solutions will be crucial in mitigating the adverse effects and creating a path towards sustainable economic recovery.

As governments grapple with the repercussions of the pandemic and strive to rebuild their economies, finding a delicate balance between addressing immediate needs and managing long-term debt sustainability will be essential. Only by working together can nations forge a path towards a financially secure and prosperous future.