US, Pakistan and other countries mired in high debt

Pakistan is not the only country that suffers high levels of debt that has become a bane for its economy.

As many countries had to struggle with the COVID-19 pandemic and the Ukrainian war with Russia, therefore, they also had no choice but to take drastic measures to support their economies.

According to the IMF global public debt has reached 100% of global gross domestic product (GDP), up from 83.3% in 2019 and 96.4% in 2020. This situation is quite worrying but it was inevitable keeping in the exigencies faced by economies of these countries.

Zambia

118.7% of GDP

At the end of 2020, Zambia became the first African state to default on its
payments to creditors since the start of the COVID-19 pandemic. Former President Edgar Lungu has been criticised for borrowing heavily and clandestinely, particularly from China, to finance his many infrastructure projects.

The continent’s second-largest copper producer owed $12 billion.

Bhutan

123.4% of GDP

This small country, located between India and China, already had a public debt of 120.7% of GDP in 2020, largely due to declining tourism revenues. Having one of the world’s least developed economies didn’t help either.

A recent agreement to export hydroelectricity to India and implement a new tourism policy targeting its neighbours could help Bhutan reduce its debt in 2022.

Singapore

129.5% of GDP

Although Singapore’s economy is doing quite well, thanks in part to its status as a commercial hub and the government’s good fiscal management, the city-state recorded a negative GDP growth of -5.4% in 2020.

In this context, the IMF has projected a rebound and stabilisation at 3.2% in 2022, depending on the post-pandemic global economic recovery.

Bahrain

129.4% of GDP

Bahrain enjoys the most diversified economy in the Cooperation Council for the Arab States of the Gulf (GCC), but remains subject to oil price fluctuations. The government is now counting on the manufacturing and tourism sectors to get the country back on track toward a balanced budget.

Portugal

131.4% of GDP

Despite Portugal’s tourism challenges, caused by the pandemic, Moody’s upgraded the country’s rating by one notch in September 2021.

The rating agency believes that Portugal’s debt burden will decline in the coming years due to stronger economic growth and improved effectiveness of fiscal policymaking.

United States

132.8% of GDP

The United States was approaching the maximum debt ceiling, set by Congress, of $28.4 trillion. If that limit is surpassed and the Senate does not raise the ceiling, the US government will find itself in default for the first time in history.