#长文创作激励计划#
Global public debt, driven by a series of crises and a sluggish and uneven global economy, continues to rise rapidly. In 2023, public debt (including domestic and external general government debt) reached $97 trillion, an increase of $5.6 trillion from 2022 (Figure 1). Figure 1: Public debt to reach record levels in 2023 Global public debt (trillion dollars)
The figure represents the notional value of the current U.S. dollar. Public debt in the whole document refers to the domestic and external debt of the general government. The general government consists of central, state and local governments and social security funds controlled by these units. UN - Technical team based on IMF calculations for April 2024. This growth is characterized by significant regional differences. Public debt in developing countries is growing twice as fast as in developed countries (Figure 2). Figure 2 Public debt in developing countries is growing at twice the rate of developed countries: outstanding public debt = 100 in 2010
UN-Technical Team calculations based on the International Monetary Fund's World Economic Outlook (April 2024).
In 2023, public debt in developing countries reached $29 trillion, accounting for 30% of total global public debt (Figure 3). This is a significant increase from the 16 per cent share in 2010, reflecting the rapid growth of public debt in developing countries. The contrast between developing regions is stark. More than three-quarters of this debt is owed by countries in Asia and Oceania, Latin America and the Caribbean at 17 per cent and Africa at just 7 per cent. The burden of these debts varies according to countries' ability to service their debts, and is exacerbated by inequalities in the international financial architecture: countries that are least able to afford debt end up paying the most. Figure 3 Nearly one-third of global public debt is owed by developing countries (US$ billion) (2023)
This dynamic becomes apparent when looking at the evolution of public debt relative to the size of developing economies. More than half of these countries have seen their public debt fall relative to GDP. The median public debt-to-GDP ratio fell from a peak of 60.4% in 2020 to 54.7% in 2023 (Figure 4). The decline was due to an increase in nominal GDP due to high global inflation, as well as stronger-than-expected real GDP growth in middle-income countries in Asia and Oceania and stronger-than-expected real GDP growth in Latin America and the Caribbean, albeit to a lesser extent. As a result, while the stock of public debt has also increased in these regions, the median debt-to-GDP ratio has declined. Figure 4 Although public debt is growing in all regions, only Africa is growing faster than GDP as a percentage of GDP – median (percentage) for each country group
In contrast, Africa's economic performance has declined and its debt burden has increased as a result of global shocks. The median public debt-to-GDP ratio continues to rise and will reach 61.9% by 2023. As a result, an increasing number of developing countries with high debt-to-GDP levels are concentrated in Africa (Figure 5). Between 2013 and 2023, the proportion of countries in the region with debt-to-GDP ratios above 60% increased from 25% to 46%. Figure 5: More countries face high debt burdens, especially in developing countries in Africa where public debt is more than 60% of GDP
2. The cost of external public debt remains high. Deep-seated asymmetries in developing countries are grappling with the international financial architecture, which exacerbates the impact of cascading crises on sustainable development. This system exacerbates their debt burden by limiting their access to affordable development finance and forcing them to borrow from more volatile and costly external sources. The limited size of the domestic financial market and the high level of external public debt make it more vulnerable to external shocks and financial instability. For example, when global financial conditions change or international investors become more risk-averse, borrowing costs can suddenly spike. Moreover, if a country's currency depreciates, debt payments in foreign currencies may soar, leading to fewer funds for development spending. As a result, developing countries have been forced to increase the transfer of resources to external creditors, making it more difficult to resolve debt crises. In 2022, the external public debt of developing countries reached $3.2 trillion. Half of these countries have external public debt of at least 28.4% of GDP and 92.4% of exports (Figure 6).
Since 2020, both indicators have improved, with GDP improving slightly and exports improving significantly. The main driver of the decline in the external public debt-to-exports ratio was the evolution of exports, which experienced a sharp decline during the pandemic before recovering strongly in 2022 amid high commodity prices. Figure 6: Median of developing countries' external debt indicators returning to pre-COVID levels in developing countries (percentage)
Despite the improvement in these indicators, the demand for external debt servicing remains high and will reach $365 billion by 2022. Of particular concern is the change in the ratio of external debt servicing to government revenues. Governments are now allocating twice as much resources to debt servicing (relative to revenue) as in 2011 compared to 2011, and the share of resources allocated to sustainable development investments has been declining (Figure 7). Figure 7: However, the external debt service burden remains high median (percentage) of developing countries
Note: External public debt refers to external public and publicly guaranteed (PPG) debt. The median represents the values that are located at the midpoint of the data distribution.
In addition, half of developing countries spend at least 6.3 per cent of their export earnings on servicing external public debt. In contrast, the 1953 London Agreement on Germany's war debt limited export revenues (public and private) that could be used to repay foreign debt (public and private) to 5% to avoid undermining economic recovery. The increasing burden of debt on development is the result of the evolution of debt financing over the past decade. Governments of developing countries borrow from a variety of sources, including bilateral (other governments), multilateral (e.g. multilateral development banks) and private creditors (including bondholders, banks and other lenders). The share of external debt owed to private creditors has increased in all regions since 2010 and will account for 61% of the total external debt of developing countries by 2022 (Figure 8). Figure 8 Creditor base makes debt costly and difficult to restructure external public debt, share by creditor type (2022)
The growing reliance on private creditors presents three main challenges. First, the increasing complexity of the creditor base makes debt restructuring more difficult, as it requires negotiations with creditors with different interests and legal frameworks from a wider range of interests. Delays and uncertainty increase the cost of resolving the debt crisis. In the current context, the relationship between the cost of restructuring and the time required for completion is highly correlated. Debt restructuring since 2020 has taken longer to complete than in previous decades, underscoring the need to improve debt crisis resolution mechanisms. Second, loans from private creditors are highly volatile and prone to rapid change, especially during crises when investors withdraw as they "flee to safe assets". This can lead to an outflow of resources when the country is least able to afford it. In 2022, developing countries paid $49 billion more to external creditors than they received in new payments, resulting in negative net resource transfers. Figure 9 Nearly $50 billion in outflows due to divestments from private creditors: net transfers of external public debt of developing countries by type of creditor (billion dollars)
Concentrate; Net transfers are defined as expenditures minus servicing of external public debt and publicly guaranteed debt.
Net resource transfers vary by type of creditor, illustrating the complexity of the current creditor base. In 2022, bilateral and multilateral creditors provided a total of US$40 billion in positive transfers, while private creditors withdrew a record US$89 billion from developing countries (Figure 9). A total of 52 countries experienced net outflows in 2022, up from 32 in 2010, most of which were in Africa, Asia and Oceania (Figure 10). The increase in the number of countries experiencing resource transfer underscores the extent of the problem, which is exacerbated by rising borrowing costs. Figure 10 Since 2014, net debt outflows from developing countries have more than doubled in the number of developing countries with negative net transfers of external public debt
Third, borrowing from private sources on commercial terms is more costly than providing concessional financing from multilateral and bilateral sources. Inequities in the international financial architecture exacerbate disparities in the cost of financing. The cost of borrowing in developing countries is much higher than in developed countries. Borrowing rates in developing regions are 2 to 4 times higher than in the United States and 6 to 12 times higher than in Germany (Figure 11). High borrowing costs increase the resources needed to repay creditors, making it difficult for developing countries to finance their investments. Figure 11: The borrowing costs of developing countries are much higher than the ratio of developed countries' developing to developed country bond yields
3. A world of debt, the burden of global prosperity is increasing day by day
People pay the price. Since 2022, global central bank interest rate hikes have had a direct impact on public budgets in developing countries. Net interest payments on public debt reached $847 billion in 2023, up 26% from 2021 (Figure 12).
More than half of developing countries now spend at least 8% of government revenues on interest payments, a figure that has doubled in the last decade (Figure 13). Interest payment pressures are increasing in all regions, particularly in Africa, Latin America and the Caribbean.
Note: Median for each country group. The median represents the values that are located at the midpoint of the data distribution. The net interest payments of the broad government are defined as the total domestic and foreign interest expenses incurred on loans and other forms of borrowing minus the interest income received. In 2023, a record 54 developing countries (38% of the total) spent 10% or more of government revenues on interest payments, nearly half of which were in Africa (Figure 14). Figure 14 Fifty-four developing countries incur significant interest payments, nearly half of which have net interest expenditures exceeding 10 per cent of their income in Africa
Interest payments in developing countries are not only growing rapidly, but are outpacing growth in key public expenditures such as health and education (Figure 15). Figure 15 Interest expense grew faster than other public expenditure, nominal change in the category of public expenditure in developing countries, 2010-2012 and 2020-2022 (%)
The rapid increase in interest payments has constrained spending in developing countries. For example, in the early years of the COVID-19 pandemic, interest expenses in Africa, Asia, and Oceania (excluding China) were higher than health expenditures. In 2020–2022, per capita public health expenditure in these regions was only US$39 and US$62, respectively. At the same time, per capita expenditures for servicing interest on public debt reached US$70 and US$84, respectively (Figure 16). Figure 16 Spending on debt servicing exceeds spending on services to the people, per capita public expenditure on education, education and health (US$) in some regions (2020–2022)
In these basic categories, the number of countries where interest expenses exceed expenditures is increasing (Figure 17). Between 2020 and 2022, 15 countries spent more on interest than on education, and 46 countries outspent on health. Figure 17 Number of developing countries spending more on interest than on development more developing countries spending more on public resources on interest than on education or health
A total of 3.3 billion people live in countries where interest payments are higher than education or health expenditures (Figure 18). This state of affairs is untenable and must be changed. Figure 18 3.3 billion people live in countries where interest expenditures exceed education or health expenditures, and population in developing countries where interest expenditures exceed education or health expenditures (2020–2022)
【To be continued】Please stay tuned for the next issue.