A report of Center for Investment Analysis and Macroeconomic Research of the CSR had revealed alarming data of public debts of the Countries around the world. The CSR Report posted Japan as the leader in public debt in the world at the moment, where it exceeds 200% of Country’s GDP, the UK, the USA and the Eurozone also have a high level of debt, about more than 100% of their GDP. The highest level of public debt is observed mainly among developed countries such as Japan 234%, the United States 160%, Great Britain 144% and the Eurozone 120.4 %. However, it was noted that despite the massive levels of debt burden in many large countries, problems with debt servicing are not expected in the foreseeable future. The study of the Institute of International Finance (IIF) and the OECD showed that the aggregate public debt to GDP in the world amounted to 105% by the end of year 2020. The head of the Center for Investment Analysis and Macroeconomic Research Mr. Daniil Nametkin has shared the details of global debt issues with the media. According to him, the world’s largest regulators have maintained an ultra-low-rate regime for many years, which greatly simplifies debt service. According to reports, during the coronavirus pandemic global regulators had taken extraordinary measures to provide liquidity to markets to maintain the stability of the financial system of the world. It said that the inflation was increased in developed countries because of large-scale measures to support the economy during the pandemic. Public debt is a global phenomenon, and most countries of the world own this burden less or more according to their economic condition and financial resources. The governments undertake several social, welfare and development projects for the benefit and wellbeing of its public and some of those projects do not pay back much revenue to the governments but the rulers carry on these initiatives in the larger interest of the public through provision of subsidies. Various mass transit systems like metros around the globe are being funded by the government to keep them running. Usually, governments continue borrowing from Public and Private sectors to run their business. However, the problem arises when the high-level debts push the country into an economic crisis and donors refuse to provide more loans due to Country’s poor economic position. According to reports, the sovereign debts of the developed countries have risen to an alarming level in recent years and pose a serious threat to their economic projections.
According to a survey of the IIF, the debt to GDP ratio in developed nations was 380% as compared to over 200% in the developing countries during 2017. There is a general opinion that the overwhelmed US’s debt can collapse the global economy if its public debt exceeds the ceiling.
The problem of US public debt was aggravated by the massive tax cuts by the Trump administration, whereas the coronavirus pandemic further pushed the US economy into a debt hole. According to the IMF, the annual increase in US debt was about 7.1% in 2017, whereas US debt stood at $ 20.5 trillion during the same period. Despite the threat of US public debt to the global economy, the individual mounting debt of the countries is also putting tremendous pressure on public finances around the world. This financial pressure forced the governments to reduce their spending in social services, health, education, and other welfare initiatives which ultimately affect the disadvantaged and poor segments of the society.
