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From the United States to China: By 2030, these countries will top the global debt list

The International Monetary Fund projects Sudan, Japan and Singapore to have the highest liabilities

Billetes de todo el mundo
U.S. dollars and other world currencies.CHRIS HELGREN (Reuters)
Denisse López

It’s a fact: in the coming years, countries will struggle to reduce their debt levels. Even as inflation stabilizes, governments worldwide must act promptly to maintain healthy public finances. The International Monetary Fund’s (IMF) latest report warns that global debt will rise each year, reaching 99% of gross domestic product (GDP) in 2029, driven by China and the United States. The debt of the world’s two largest economies will even surpass the historic peaks of the pandemic years. Meanwhile, international institutions like the IMF have repeatedly warned about the need for sustainable public spending.

By 2030, Sudan (284%), Japan (251%) and Singapore (165%) will have the highest levels of gross public debt on the planet. Italy is next on the list, with debt amounting to 144% of its GDP. The most indebted European countries include Greece, France and Spain (number 13 on the list with debt of 104% of GDP). If these projections are realized, the peak debt levels of the pandemic will be a distant memory. Global public debt will never return to pre-pandemic levels. Encouragingly, Spain is expected to buck this trend by steadily reducing its public debt.

IMF data from 2021 indicates a significant decrease in budget deficits and public debt — only 91% of GDP. However, the trend reversed the following year due to gradual interest rate increases, leading to higher interest costs. Governments also opened the money floodgates to ease the effects of the pandemic, inflation and energy price shocks. Many also lowered taxes briefly, pumped up social welfare programs, wages, and industrial investment.

All this government spending added to the national debt, and was only partially offset by higher income from inflation. Spain’s temporary taxes on the energy and banking sectors helped, but also fell short of offsetting its budget deficit. The IMF says that progress toward normalizing fiscal policies has stalled, especially in China and the United States, which are projected to nearly double their public debt by 2053. Experts caution that the manner in which these two nations manage fiscal policies could greatly affect the global economy and pose risks to other economies.

Public debt has also increased in other parts of the world. Emerging market debt increased by 3% (on average) to reach 58% of GDP in 2023, with projections suggesting this trend will continue, albeit with some exceptions. South Africa is expected to have a 12% rise in its debt-to-GDP ratio, reflecting sustained weak growth and relatively high interest rates, potentially reaching close to 86% of GDP by 2029. However, other advanced economies saw a slight decrease in public debt of just over 2% in 2023, bringing it down to approximately 102% of GDP. A slow downward trend is expected to help them attain a 100% debt-to-GDP ratio by the end of the decade.

Benefits of fiscal measures

Analysts suggest taking fiscal measures to boost reserves as growth prospects slow and interest rates stay high. It’s also crucial to ease inflation down to more moderate levels. But it will be a major challenge to cut social welfare and curb public spending during an inflation crisis, and also invest in the green transition. The IMF says a well-crafted fiscal policy supporting innovation in high-impact sectors and public research funding can enhance long-term growth for tech-forward economies.

Regarding emerging and developing economies, the IMF recommends boosting revenue by enhancing tax systems, broadening tax bases, and strengthening institutional capacity. This could fund vital public investments for green and digital technology adoption.

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