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Global Debt Crisis 2024

When we talk about the themes of 2024, we often forget to mention the debt.  

Global government debt is expected to reach a staggering $97.1 trillion by the end of this year, a significant increase from the pre-pandemic level.   

This surge in debt is primarily attributed to the extraordinary financial measures implemented by governments to support the economy during the COVID-19 crisis.   

However, these measures have also exposed financial vulnerabilities, as rising interest rates are increasing borrowing costs and putting a strain on government finances.  

The United States, with its massive $33.2 trillion in government debt, holds over a third of the global total.    The escalating debt burden is now consuming a significant portion of government spending, accounting for 20% of total expenditures.   

This trend is expected to continue, with debt servicing costs projected to reach $1 trillion by 2028, exceeding defense spending.  

Japan, the world's third-largest economy, grapples with an alarming debt-to-GDP ratio of 255%, showcasing the severe financial challenges it faces.   

Egypt, another country with substantial debt, allocates a substantial 40% of its revenues to debt repayments, the highest on the continent.   

This exemplifies the fiscal strain experienced by several emerging economies.  

North America stands out as the region with the highest debt levels, both in absolute terms and relative to GDP.   

Canada, mirroring the U.S.'s debt surge, ranks as one of the top 10 countries in the world for outstanding government debt.  

South America, with $3.2 trillion in debt, comprises 3.3% of the global total.   

While some governments have begun lowering interest rates as inflation eases, overall debt levels are projected to remain significant across the region.  

Africa has also witnessed a rapid rise in debt, with an average of 40% of public debt held in foreign currencies. This exposure to exchange rate fluctuations poses a significant risk.   

Additionally, higher interest rates across Africa compared to advanced economies further elevate debt servicing costs.  

By 2028, the IMF predicts that global public debt will exceed 100% of GDP, reaching levels only observed during the pandemic.   

This alarming projection underscores the urgency for governments to address their debt burdens and implement sustainable fiscal policies to ensure long-term financial stability.  

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