The global public debt has surpassed the USD 92 trillion (EUR 83.47 trillion) mark. This week, the United Nations issued a study highlighting massive borrowing by nations to solve emergencies, including one related to a recent coronavirus outbreak. However, many rising economies are already feeling the impact of excessive debt.
Domestic and external debt have more than fivefold expanded globally over the last two decades, greatly surpassing global economic development. According to the UN, global GDP has ‘barely’ quadrupled since 2002, according to a report issued two days before the G20 finance ministers and central bank governors meet.
Emerging economies account for roughly 30% of overall public debt, with China, India, and Brazil accounting for 70%. A total of 59 nations in the developing economies have debt that exceeds 60% of GDP, indicating already significant debt.
“High levels of debt impose a significant financial burden on emerging economies,” according to the United Nations. It specifically mentioned the excessively high interest payments alone for impoverished nations. “In Africa, for example, the amount of finance devoted to interest on loans is higher than spending on education or health,” stated the UN study, which added that such nations are home to 3.3 billion people. “These countries are thus faced with an intractable choice: repay their debt or finance their populations’ needs,” the UN stated.
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