External public debt

Servicing of external public debt

a Excludes official public debt.

C. Public debt in the ESCWA region

Public debt in the more diversified economies

Public debt in the Gulf Cooperation Council countries

History offers two clear lessons reducing public debt is incredibly difficult without growth, and increasing growth is incredibly difficult with a huge burden of public debt. So we face a twofold imperative securing growth while reducing debt.

b Total public debt denominated in pesos and foreign currency.

For starters, Syriza and others argue that Greece's public debt, at a massive 170 of GDP, is unsustainable and must be cut. Given that the country's official debt constitutes the bulk of its overall public debt, the government wants it reduced.

In Lebanon, persisting high levels of public debt forced the Government to direct much of its expenditure towards debt service.

A public debt crisis in Japan (as the combination of recession, deflation, and high deficits drove up the debt GDP ratio).

Most economists failed to foresee the economic dynamics that actually led to the crisis, because they failed to pay enough attention to the rapid increase in US total debt. Instead, they focused exclusively on US foreign debt, ignoring household debt (mortgage and consumer debt), public debt, business debt, and financial debt.

Although the government s stimulus policies have increased the national debt, the debt GDP ratio remains relatively low, at roughly 37 . Public debt in Japan, by contrast, exceeds 220 of GDP.

The most likely explanation for this public investment shortfall is fiscal constraints. And, indeed, debt and unfunded non debt liabilities increasingly weigh down public sector balance sheets and pension funds, eroding the foundations of resilient, sustainable growth.

WASHINGTON, DC Everyone is talking about debt, citing huge nominal figures that strongly affect public policy debates worldwide. But all debt is not created equal.

To do the same thing with bank debt could pull hitherto sound economies into the abyss, because bank s balance sheets are much larger than the volume of government debt. In Spain, the public debt to GDP ratio is 69 , but the debt of the Spanish banking system totals 305 of GDP, or about 3.3 trillion about as much as the combined public debt of all five crisis stricken eurozone countries.

In 2004, a substantial part of the budget surplus was used to repay public debt.

One possible solution would be to permit member states to issue debt as eurobonds up to, say, 60 of GDP, and to require them to be individually responsible for any debt exceeding that level. This would give countries with high levels of public debt an incentive to consolidate their public finances.

For fiscal policy, the crisis showed the value of maintaining low public debt and deficits during good times countries with healthier public finances have more space to cushion the economic impact of crises. But the Great Recession has caused public debt and deficits in many advanced economies to soar.

Assuaging doubt about the sustainability of public debt in the eurozone would thus probably require a deep restructuring as well. The eurozone crisis could certainly be resolved if all existing public debt were transformed into 20 year Eurobonds with a yield of 3 , and a five year grace period on debt service.

Another major risk of interest rate liberalization in China stems from rising public debt, particularly local government debt, which has grown significantly in the wake of the global financial crisis. A key parameter for determining the long run sustainability of public debt is the gap between interest rates and the nominal GDP growth rate.

This is my global public debt clock, and, as you can see, it's 32 trillion and counting.

In Jordan, total public debt increased slightly from 7,071 to 7,293 million Jordanian dinars (JD) in 2004.

Meanwhile, governments were running large deficits a legacy of the economic downturn which renewed growth was supposed to shrink. In the eurozone, countries like Greece faced sovereign debt crises as bank bailouts turned private debt into public debt.

In countries that borrow in their own currency and can monetize the public debt, a sovereign debt crisis is unlikely, but monetization of fiscal deficits can eventually lead to high inflation. And inflation is like default a capital levy on holders of public debt, as it reduces the real value of nominal liabilities at fixed interest rates.

For starters, when it comes to public debt, there is a big difference between the gross and net figures. While Japan s gross public debt, for example, is a massive 246 of GDP, the net figure, accounting for intra government debts, is 127 of GDP.

Unsustainable private debt problems must be resolved by defaults, debt reductions, and conversion of debt into equity. If, instead, private debts are excessively socialized, the advanced economies will face a grim future serious sustainability problems with their public, private, and foreign debt, together with crippled prospects for economic growth.

The international community has, so far, failed to develop effective and equitable arrangements for restructuring sovereign debt, despite the clearly dysfunctional and problematic consequences of past international public debt crises. This prevents timely debt workouts when needed, effectively impeding recovery.

Some analysts argue that, given guarantees of debt incurred by public corporations, the Greek government s obligations are even higher. To escape from this morass, Greece needs a massive debt write down.

Italy has tried to counteract the economic contraction by increasing its public debt. With the European Central Bank and intergovernmental rescue operations keeping interest rates low, Italy s public debt has been able to rise by one third from the end of 2007 to the spring of 2014.

Until recently, public debt was considered the ultimate safe asset. Indeed, its risk free status was embedded in the European Union regulatory framework, which allows banks to hold large volumes of any eurozone country s public debt without having to put aside any capital to cover potential losses.

Limited capacity for debt socialization reflects the EU Treaty s no bailout clause, which bars outright mutualization at the eurozone level of (national) public debt. Moreover, the lending capacity of the new rescue fund, the European Stability Mechanism, is capped at 700 billion ( 905.6 billion), which represents only a fraction of the total public debt of the countries potentially needing financial assistance.

Starting from 1999, the first year of recession, fiscal deficits rose substantially, alongside the public debt to GDP ratio.

The table below presents the evolution of total external debt of the public sector, with a breakdown of creditors.

That left individual eurozone members exposed to brutal pressure by financial markets at a time when excessive private debt was turned into unsustainable public debt. Suddenly, the eurozone had become a straightjacket.

As with RMBS, this view that public debt was totally safe was underpinned by the fact that no advanced country, at least in the post 1945 era, had ever defaulted. Investors thus assumed that they did not need to assess the credit risk of eurozone countries (national) public debt.

In November 2001, the authorities again restructured the public debt, this time exchanging dollar denominated bonds for domestic guaranteed loans.

An increase in fiscal deficits and public debt places negative pressure on financial systems and growth prospects, eroding country creditworthiness.

Cleaning up high private sector debt and lowering public debt ratios by growth alone is particularly hard if a balance sheet crisis leads to an anemic recovery. And reducing debt ratios by saving more leads to the paradox of thrift too fast an increase in savings deepens the recession and makes debt ratios even worse.

In addition, given that local government debt comprises 27 of China s 2010 GDP, while central government debt and policy loans stand at 20 and 6 of GDP, respectively, the total public debt to GDP ratio is approximately 53 lower than Germany s. So, while China should not be complacent about local government debt, panic is unwarranted.

Blanchard is a pioneer in the economics of public debt. He knows that Greece s debt has not been sustainable at any point during the last five years, and that it is not sustainable now.

Even if public debt is not growing as fast as before, the huge volume of existing debt must be repaid. The best cure would be controlled higher inflation that is, the aforementioned temporary increase in the inflation target to erode the real value of public debt and forestall the risk of a much more damaging inflationary shock later, one in which expectations become unhinged.

With that change, the banker s traditional imperative to maintain fidelity and trust to keep faith, as Higginson put it was forgotten. And it is in America s public debt that the debris of its financial system s broken promises are collected, just as Italy s massive public debt reflects its past national prodigality.

The dilemma is that, whereas fiscal consolidation is necessary to prevent an unsustainable increase in the spread on sovereign bonds, the short run effects of raising taxes and cutting government spending tend to be contractionary. This, too, complicates the public debt dynamics and impedes the restoration of public debt sustainability.

Japan, too, can finance its deficits, despite astronomical public debt, because it borrows in yen and overwhelmingly from Japanese institutional investors.