Wikipedia

Global debt

Global debt refers to the total amount of money owed by all sectors, including governments, businesses, and households worldwide.[1]

As of 2022, global debt was the equivalent of 305 trillion USD. This including debt by both public and private debtors.[2] The total external debt owed by public and private debtors to creditors in other countries amounted to $76 trillion in 2019.[3] The global debt continues to grow. Between 2015 and 2019 global debt increased by approximately 6% per year.[4][5]

Debt by country and region

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Region Country Public debt % of GDP Private debt % of GDP External debt, billion $ GDP, billion $ Total debt, billion $ Money supply, billion $
Northern Africa Algeria 51.3 5.2 193.6 186.8
Northern Africa Egypt 89.84 131.6 435.6 365.9
Northern Africa Libya 48.8 83.5
Northern Africa Morocco 76.4 65.7 133.1 181.4
Northern Africa Sudan 270.4 23.0 31.5 10.0
Northern Africa Tunisia 82.9 41.0 45.6 35.6
Sub-Saharan Africa Angola 136.8 67.3 124.9 46.8
Sub-Saharan Africa Botswana 19 1.6 18.4 9.7
Sub-Saharan Africa Burkina Faso 46.5 4.5 19.6 9.1
Sub-Saharan Africa Burundi 66 0.6 3.4 1.5
Sub-Saharan Africa Cameroon 44.9 13.9 45.7 9.8
Sub-Saharan Africa Central African Rep. 0.9 2.6 0.8
Sub-Saharan Africa Chad 52.1 3.7 12.9 2.2
Sub-Saharan Africa Congo, dem rep. 15.16 6.1 64.8 8.0
Sub-Saharan Africa Congo, rep. 110.1 5.3 16.0 3.6
Sub-Saharan Africa Côte d'Ivoire 47 25.1 73.0 27.0
Sub-Saharan Africa Djibouti 41 2.7 3.8 3.1
Sub-Saharan Africa Eritrea 182.2 0.8 2.6 4.5
Sub-Saharan Africa Ethiopia 55.42 30.4 105.3 35.8
Sub-Saharan Africa Gabon 77.3 7.6 22.5 5.1
Sub-Saharan Africa Gambia 85 0.8 2.2 1.1
Sub-Saharan Africa Ghana 78.3 31.3 73.9 22.8
Sub-Saharan Africa Guinea 44 4.2 21.0 5.6
Sub-Saharan Africa Guinea-Bissau 79.4 0.8 1.7 0.8
Sub-Saharan Africa Kenya 67.6 38.2 114.7 47.2
Sub-Saharan Africa Lesotho 54.2 1.1 2.6 1.0
Sub-Saharan Africa Liberia 58.3 1.5 3.8 0.8
Sub-Saharan Africa Madagascar 49 4.9 14.6 4.1
Sub-Saharan Africa Malawi 54.8 2.9 12.0 2.8
Sub-Saharan Africa Mali 47.3 6.1 19.3 7.0
Sub-Saharan Africa Mauritania 59.2 5.7 9.3 2.6
Sub-Saharan Africa Mauritius 99.91 18.5 11.3 18.4
Sub-Saharan Africa Mozambique 119 20.9 18.1 10.7
Sub-Saharan Africa Namibia 66.7 8.0 13.0 9.3
Sub-Saharan Africa Niger 45 4.6 15.6 3.0
Sub-Saharan Africa Nigeria 35 70.6 510.6 128.7
Sub-Saharan Africa Rwanda 64.6 8.2 12.1 3.2
Sub-Saharan Africa Senegal 69.2 17.2 28.4 12.9
Sub-Saharan Africa Sierra Leone 76.3 2.1 4.3 1.3
Sub-Saharan Africa Somalia 4.7 8.5 2.4
Sub-Saharan Africa South Africa 69.4 170.8 426.2 317.9
Sub-Saharan Africa Tanzania 39.15 25.5 77.5 16.2
Sub-Saharan Africa Uganda 46.4 17.2 46.4 10.5
Sub-Saharan Africa Zambia 140.2 30.0 26.7 8.3
Sub-Saharan Africa Zimbabwe 102.6 12.7 36.4 6.4
Caribbean Cuba 30.1 107.4
Caribbean Dominican rep. 71.5 44.5 109.1 46.7
Caribbean Haiti 53.9 2.3 20.2 5.5
Caribbean Jamaica 108.1 18.0 15.7 11.3
Caribbean Puerto Rico 50.2 56.8 116.8
Northern America Canada 117.46 303.91 2124.9 2221.2 9359.5 2723.2
Northern America United States of Am. 133.92 242.97 20276.0 25346.8 95529.6 28261.7
Northern America Mexico 61.03 118 467.5 1322.7 593.9
Central America Costa Rica 67.98 31.3 65.3 36.0
Central America El Salvador 89.17 18.3 30.7 21.6
Central America Guatemala 31.5 25.1 91.0 57.2
Central America Honduras 50.96 11.0 30.1 23.2
Central America Nicaragua 65.71 12.1 15.8 6.3
Central America Panama 66.28 108.9 70.5 54.9
South America Argentina 102.8 253.8 564.3 160.3
South America Bolivia 78.1 15.4 41.0 43.5
South America Brazil 98.09 549.2 1833.3 2038.6
South America Chile 32.54 220.13 193.3 317.6 802.5 298.2
South America Colombia 30.02 155.2 351.3 204.8
South America Ecuador 60.9 56.2 115.5 56.5
South America Guyana 51.1 1.5 13.5 7.6
South America Paraguay 36.65 19.8 41.9 23.1
South America Peru 32.48 73.5 240.3 118.0
South America Uruguay 68.06 43.7 64.3 38.0
South America Venezuela 304.13 189.3 49.1 26.0
Central Asia Kazakhstan 26.33 163.0 193.6 68.3
Central Asia Kyrgyz rep. 68.04 8.7 9.0 4.3
Central Asia Tajikistan 51.31 6.8 7.8 2.4
Central Asia Turkmenistan 32.25 5.6 76.6
Central Asia Uzbekistan 36.44 32.2 73.1 13.1
Eastern Asia China 61.4 2349.4 19911.6 42192.7
Eastern Asia Hong Kong 1 1648.4 369.5 1680.4
Eastern Asia Japan 254.13 221.94 4254.3 4912.1 23385.3 13813.0
Eastern Asia Korea, North 5.0 28.5
Eastern Asia Korea, South 47.88 271.55 457.7 1804.7 5764.7 2986.7
Eastern Asia Mongolia 91.3 33.2 18.1 11.7
Eastern Asia Taiwan 32.65 189.7 841.2
South-eastern Asia Cambodia 34.24 17.6 28.0 36.1
South-eastern Asia Indonesia 79.29 417.5 1289.3 576.3
South-eastern Asia Laos 82.6 17.2 17.3 6.3
South-eastern Asia Malaysia 67.43 0.3 439.4 604.6
South-eastern Asia Myanmar 39.3 13.3 69.3 45.9
South-eastern Asia Philippines 51.68 98.5 412.0 372.8
South-eastern Asia Singapore 152 1557.6 424.4 637.9
South-eastern Asia Thailand 51.83 204.1 522.0 644.2
South-eastern Asia Vietnam 46.3 125.0 408.9 580.7
Southern Asia Afghanistan 7.4 3.0 20.1 7.5
Southern Asia Bangladesh 39.5 67.7 396.5 229.2
Southern Asia Bhutan 131.2 2.9 2.7 2.7
Southern Asia India 89.61 564.2 3534.7 3107.0
Southern Asia Iran 45.6 5.5 1739.0 1434.7
Southern Asia Nepal 42.2 7.9 36.3 42.7
Southern Asia Pakistan 79.6 116.5 346.3 188.8
Southern Asia Sri Lanka 101.2 56.3 81.9 51.7
Western Asia Armenia 63.5 13.1 14.0 7.6
Western Asia Azerbaijan 21.3 15.8 73.4 29.5
Western Asia Bahrain 129.7 50.3 44.2 38.0
Western Asia Cyprus 119.14 371.78 213.2 27.7 136.1
Western Asia Georgia 63.77 20.1 20.9 12.9
Western Asia Iraq 84.2 297.3 162.3
Western Asia Israel 71.67 132.5 520.7 553.5
Western Asia Jordan 88 38.0 47.7 54.7
Western Asia Kuwait 11.7 47.2 186.6 225.1
Western Asia Lebanon 135 68.9 18.1 47.1
Western Asia Oman 71.4 46.3 110.1 56.9
Western Asia Qatar 72.6 167.8 225.7 257.5
Western Asia Saudi Arabia 32.4 205.1 1040.2 729.2
Western Asia Syria 4.8 21.4 12.4
Western Asia Turkey 39.77 172.96 435.9 692.4 1472.9 467.4
Western Asia United Arab Emirates 39.36 237.6 501.4 562.5
Western Asia Yemen 84.17 7.1 28.1 9.8
Eastern Europe Belarus 48.05 42.5 59.4 20.1
Eastern Europe Bulgaria 33.08 205.68 43.3 89.5 213.8 84.8
Central Europe Czech Rep. 37.81 142.41 191.9 296.2 533.9 273.4
Central Europe Hungary 78.46 139.83 123.3 197.8 431.8 137.5
Eastern Europe Moldova 34.78 8.5 13.8 7.2
Central Europe Poland 57.47 122.33 351.8 699.6 1257.8 547.8
Eastern Europe Romania 47.36 121.9 142.4 286.5 484.9 131.8
Eastern Europe Russia 19.28 215.46 475.5 1829.1 4293.5 1284.0
Central Europe Slovakia 60.27 139.81 115.9 118.4 237.0
Eastern Europe Ukraine 60.78 129.9 200.1 87.6
Northern Europe Denmark 42.13 280.16 504.8 399.1 1286.3 271.4
Northern Europe Estonia 18.46 179.67 23.9 37.2 73.7
Northern Europe Finland 69.55 238.56 631.5 297.6 917.0
Northern Europe Iceland 77.08 264.24 19.4 27.9 95.1 20.0
Northern Europe Ireland 58.52 343.73 2829.3 516.1 2076.2
Northern Europe Latvia 43.46 110.74 40.2 40.3 62.1
Northern Europe Lithuania 47.13 111.28 37.9 69.8 110.5
Northern Europe Norway 41.4 316.07 651.0 541.9 1937.3 418.9
Northern Europe Sweden 121.13 279.79 911.3 621.2 2490.7 550.4
Northern Europe United Kingdom 130.3 209.82 8721.6 3376.0 11482.5 5411.7
Southern Europe Albania 77.57 10.9 17.9 15.9
Southern Europe Bosnia Herzegovina 36.72 14.3 23.4 19.3
Southern Europe Croatia 88.74 214.78 48.3 69.5 210.8 60.2
Southern Europe Greece 211.21 139.13 484.9 222.8 780.5
Southern Europe Italy 155.82 180.17 2463.2 2058.3 6915.8
Southern Europe Kosovo 24.1 3.1 9.7 5.6
Southern Europe Malta 53.3 334.76 98.2 17.3 66.9
Southern Europe Montenegro 107.15 9.7 6.0 3.6
Southern Europe North Macedonia 60.22 10.6 14.2 9.4
Southern Europe Portugal 135.19 258.73 462.4 251.9 992.3
Southern Europe Serbia 58.37 38.5 65.0 39.4
Southern Europe Slovenia 79.77 117.78 48.7 63.6 125.7
Southern Europe Spain 119.92 209.96 2338.9 1435.6 4735.6
Central Europe Austria 83.16 174.73 688.4 479.8 1237.4
Western Europe Belgium 114.14 273.51 1317.5 609.9 2364.2
Western Europe France 115.08 294.66 6356.5 2936.7 12032.8
Central Europe Germany 69.05 180.47 5671.5 4256.5 10620.9
Western Europe Luxemburg 24.82 472.55 4266.8 86.9 432.2
Western Europe Netherlands 52.49 283.63 4345.4 1013.6 3406.9
Western Europe Switzerland 42.38 270.98 1909.4 842.0 2638.4 1538.3
Oceania Papua New Guinea 46.4 18.0 29.9 8.0
Oceania Australia 57.33 3115.9 1748.3 2402.2
Oceania New Zealand 43.1 190.6 257.2 288.1
World Total 76560.0 96100.1 246000.0 137903.6

Explanation of the table:

Public debt % of GDP: This is the total domestic and external debt of the government and its institutions as percent of the gross domestic product of the country.

Private debt % of GDP: This is the total domestic and external debt of the citizens and private companies as percent of the gross domestic product of the country.

External debt: This is the total debt of public and private debtors to foreign country banks and other foreign creditors. The amounts are in billion US $, calculated by the official exchange rate (a billion is defined here as a thousand millions, or 109).

GDP: Gross domestic product, billion US $.

Total debt, billion $: This is the sum of all debt, domestic and external, owed by public and private debtors in the country. The amounts are in billion US $, calculated by the official exchange rate.

Money supply, billion $: This is the supply of broad money, or money in circulation, of the country in its own currency. The amounts are in billion US $, calculated by the official exchange rate.

Disclaimer: Most values are from 2020 or 2021. Some values are a few years older. Values from different sources may not have been calculated in the same way. You cannot expect the table to be updated every year because some information is difficult to find and nobody has volunteered to keep the table up to date.

Data sources:

Public debt: IMF global debt database. Data for 2020.[6]

Private debt: IMF global debt database. Data for 2020.[6]

External debt: Data for Australia, Austria, Bahrain, Belgium, Canada, Chile, Croatia, Cuba, Cyprus, Czech Rep., Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, North and South Korea, Kuwait, Latvia, Lithuania, Luxemburg, Malta, Namibia, Netherlands, New Zealand, Norway, Oman, Poland, Portugal, Puerto Rico, Qatar, Saudi Arabia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, United Arab Emirates, United Kingdom, USA, Uruguay, European Union, and World are from the CIA world factbook with data from 2019.[3] All other data are from the World bank with data for 2020.[7]

GDP: Most data are from IMF World Economic Outlook Database, 2022.[8] Data for Afghanistan, Cuba, Lebanon, Pakistan, Syria, Ukraine, and World are from the World bank with data for 2020 or 2021.[7] The data for North Korea are copied from Economy of North Korea.

The money supply data are from the World bank with data for 2020.[7]

Consequences of high debt

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National Debt Clock outside the IRS office in New York City, 2012

There is more debt in the world than there is money in circulation.[9] The ratio of total debt to money supply ranges from 1.7 in Japan and Switzerland to 4.7 in Denmark and Iceland. The ratio for the world total is 1.8, according to the above table. A high ratio of public debt to money cannot be sustained, according to some models.[10] Economists prefer to look at the ratio of debt to the GDP. This ratio ranges from 1.5 in Latvia to 5.0 in Luxemburg. The world total is 3.5, according to the Institute of International Finance.[5]

The reason why there is more debt than money in circulation can be explained by the creation of credit money. When a bank issues a loan, it creates credit money and debt at the same time. The total debt in society and the total money in circulation are both increased by the same amount, which is the principal of the loan. By the time the loan has to be paid back, the debt has been increased by the compound interest while the credit money has not been increased. Most of the excess debt thus originates from compound interest of bank credit.[11][12]

It may seem impossible to repay all debt when there is more debt than money in the world, but it is theoretically possible to pay back all debt if the banks spend their income from interest payments to buy products and services so that the same money can circulate and be reused for more interest payments. However, critics fear that too much money is hoarded in the financial economy rather than spent in the real economy so that the total debt is spiraling up rather than being paid down.[13][14] In fact, the global debt has grown by approximately 6% per year during the period from 2015 to 2021.[4][5]

The debt may be paid down if the rate of economic growth exceeds the interest rate.[12] However, this is unlikely to happen as long as the rate of return on capital investment is greater than the rate of economic growth.[15] A further reason why this is unrealistic is, as environmentalists argue, that perpetual growth on a finite planet is not sustainable.[12][16][17]

The debt may be undermined if the inflation rate exceeds the interest rate,[18] but inflation also raises the prices of real estate and other assets, resulting in more new debt to finance housing costs.[13] A high inflation rate leads to low consumer confidence, high unemployment, and economic instability.[12][19]

The fast growing debt is a consequence of the current financial system that leads to an unbalanced and uncontrolled growth of money and debt.[12][20] There is a distorted balance between public and private interests with insufficient democratic accountability, according to a Dutch government report.[19] A high level of debt makes the economy unstable with risks of economic crises.[11][12] The consequences of recurrent crises has been described as unfair because a disproportionate share of the benefits during a financial boom goes to the financial sector, while the general public bears the costs during the subsequent bust in the form of bankruptcies, bank bailouts, unemployment, and home evictions.[19] For example, farmers in India are being forced to sell their farm and land because of inescapable debt (see Farmers' suicides in India).[21]

Consequences of high external debt

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External debt consists of government debt to foreign countries as well as private debt in foreign currencies. External debt is different from domestic debt because it affects the trade balance. Interest payments and inflation contribute negatively to the trade balance of the debtor country, while it provides a surplus to the creditor country or the country that issues the currency.[12] While the government can control the internal debt through its monetary policy and fiscal policy, it has fewer means to control the external debt.[12] A high external debt can lead to sovereign default, especially for poor countries with limited export.[11]

The growing level of unserviceable external debt in poor countries is producing a dependent relationship between debtor and creditor countries. Critics claim that this debt dependence is often used as leverage for a neocolonial relationship.[22][23] This view is opposed by development economists who find a beneficial effect of the inflow of foreign capital, whether in the form of direct investment or loans.[24]

Private banks earn rents from the circulation of money because most of the money in circulation originates from bank credit.[25] An imbalance results if money created in one country is used for circulation in another country. Currency substitution, i.e. payment in foreign currencies, is common in countries with a weak currency.[26] As far as the currency that circulates internationally originates from bank credit, it provides a seigniorage profit and an interest rent in the country where the money is created and a corresponding trade deficit for the country where the currency is circulating or stored.[27][28] This exacerbates the situation in poor countries, making them vulnerable to increasing external debt, inflation, and economic crises.[29]

Similar problems appear in countries that do not have their own currency. For example, the high external debt and financial crises of Greece, Italy, Spain, and several other Eurozone countries in the aftermath of the 2008 financial crisis was partially due to their lack of monetary autonomy and inability to control the money supply.[11]

See also

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References

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  1. ^ "What does 'global debt' mean and how high is it now?". World Economic Forum. 2023-10-02. Retrieved 2023-12-18.
  2. ^ Euro Financial Review (18 May 2022). "Global debt soars to record high over $305 trillion". Retrieved 23 September 2022.
  3. ^ a b "Debt - external". The World Factbook. CIA. Retrieved 23 September 2022.
  4. ^ a b Ranasinghe, Dhara (14 September 2021). "Global debt is fast approaching record $300 trillion - IIF". Reuters. Retrieved 3 October 2022.
  5. ^ a b c "Global Debt Monitor". Institute of International Finance. Retrieved 3 October 2022.
  6. ^ a b "Global debt database". International Monetary Fund. IMF. Retrieved 23 September 2022.
  7. ^ a b c "World Bank Open Data". The World Bank. Retrieved 23 September 2022.
  8. ^ "World Economic Outlook Databases". International Monetary Fund. IMF. Retrieved 23 September 2022.
  9. ^ Desjardins, Jeff (27 May 2020). "All of the World's Money and Markets in One Visualization". Visual Capitalist. Retrieved 3 October 2022.
  10. ^ Rodriguez, Alvaro (1993). "The Debt Money Ratio: What are the Limits?". In Baldassari, Mario; Mundell, Robert; McCallum, John (eds.). Debt, Deficit and Economic Performance. St. Martin's Press. pp. 131–150.
  11. ^ a b c d Angeles, Luis (2022). Money Matters: How Money and Banks Evolved, and Why We Have Financial Crises. Palgrave Macmillan. ISBN 978-3-030-95515-1.
  12. ^ a b c d e f g h Mitchell, William; Wray, L. Randall; Watts, Martin (2019). Macroeconomics. Macmillan. ISBN 978-1-137-61066-9.
  13. ^ a b Blain, Bob (2014). "The Root of US Public and Private Debt, as Told by the Pen of History". Michigan Sociological Review. 28: 70–88. JSTOR 43150997.
  14. ^ Van Lerven, Frank (29 March 2017). "Money Creation & Interest: Is there enough money to pay off all the interest? (Part 2)". Positive Money. Retrieved 3 October 2022.
  15. ^ Piketty, Thomas (2014). Capital in the Twenty-First Century. Harvard University Press.
  16. ^ Dhara, Chirag; Singh, Vandana. "The Delusion of Infinite Economic Growth". Scientific American. Retrieved 3 October 2022.
  17. ^ Kuzminski, Adrian (2013). The ecology of money: Debt, growth, and sustainability. Lexington Books. ISBN 978-1-4985-1096-7.
  18. ^ Kwon, Goohoon; McFarlane, Lavern; Robinson, Wayne (2006). "Public Debt, Money Supply, and Inflation: A Cross-Country Study and its Application to Jamaica". IMF Working Paper. 121 (6). SSRN 910686.
  19. ^ a b c Stellinga, Bart; Hoog, Josta de; Vries, Casper de (2021). Money and Debt: The Public Role of Banks. Research for Policy. Springer / WRR Netherlands Scientific Council for Government Policy. doi:10.1007/978-3-030-70250-2. ISBN 978-3-030-70249-6. S2CID 236226836.
  20. ^ Turner, Adair (2016). Between debt and the devil: money, credit, and fixing global finance. Princeton University Press.
  21. ^ Shiva, Vandana (2013). Making Peace with the Earth. Pluto Press. ISBN 9780745333762.
  22. ^ Charlton, Roger (2016). "External Debt, Economic Success and Economic Failure: State Autonomy, Africa and the NICs". In Riley, Stephen P. (ed.). The Politics of Global Debt. Springer. pp. 168–188. ISBN 978-1-349-22822-5.
  23. ^ Graeber, David (2012). Debt: The First 5000 Years. Penguin. ISBN 978-1-933633-86-2.
  24. ^ Loungani, Prakash; Razin, Assaf (2001). "How Beneficial Is Foreign Direct Investment for Developing Countries?". Finance & Development: A Quarterly Magazine of the IMF. 38 (2).
  25. ^ Bossone, Biagio (2021). "Commercial bank seigniorage and the macroeconomy". International Review of Financial Analysis. 76: 101775. doi:10.1016/j.irfa.2021.101775. S2CID 235507092.
  26. ^ Bennett, Adam; Borensztein, Eduardo; Baliño, Tomás JT (1999). Monetary policy in dollarized economies. International Monetary Fund.
  27. ^ Canzoneri, Matthew; Cumby, Robert; Diba, Behzad; López-Salido, David (2013). "Key currency status: An exorbitant privilege and an extraordinary risk". Journal of International Money and Finance. 37: 371–393. doi:10.1016/j.jimonfin.2013.06.006.
  28. ^ Chen, Zefeng (2021). Essays in the Us Dollar Dominated International Financial Market (PhD). Stanford University. Retrieved 3 October 2022.
  29. ^ Levy-Yeyati, Eduardo (2006). "Financial dollarization: evaluating the consequences" (PDF). Economic Policy. 21 (45): 62–118. doi:10.1111/j.1468-0327.2006.00154.x. S2CID 219722972.
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