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

debt Debt is an obligation that requires one party, the debtor, to pay money Loan, borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Co ...

was the equivalent of 305 trillion

USD The United States dollar (symbol: $; currency code: USD) is the official currency of the United States and several other countries. The Coinage Act of 1792 introduced the U.S. dollar at par with the Spanish silver dollar, divided it int ...

. This includes debt by both public and private debtors. The total

external debt A country's gross external debt (or foreign debt) is the liabilities that are owed to nonresidents by residents. The debtors can be government, governments, corporation, corporations or citizens. External debt may be denominated in domestic or f ...

owed by public and private debtors to

creditors A creditor or lender is a Party (law), party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided ...

in other countries amounted to $76 trillion in 2019. The global debt continues to grow. Between 2015 and 2019 global debt increased by approximately 6% per year.

Debt by country and region

Explanation of the table: Public debt % of GDP: This is the total

domestic Domestic may refer to: In the home * Anything relating to the human home or family ** A domestic animal, one that has undergone domestication ** A domestic appliance, or home appliance ** A domestic partnership ** Domestic science, sometimes cal ...

and

of the government and its institutions as percent of the

gross domestic product Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performanc ...

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

of the country. External debt: This is the total debt of public and private debtors to foreign country banks and other foreign

. The amounts are in billion US $, calculated by the official

exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...

(a billion is defined here as a thousand millions, or 10⁹). GDP:

Gross domestic product Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performanc ...

, 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 Supply or supplies may refer to: *The amount of a resource that is available **Supply (economics), the amount of a product which is available to customers **Materiel, the goods and equipment for a military unit to fulfill its mission *Supply, as ...

broad money In economics, broad money is a measure of the amount of money, or money supply, in a national economy including both highly liquid "narrow money" and less liquid forms. The European Central Bank, the OECD and the Bank of England all have their own ...

, or money in circulation, of the country in its own

currency A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific envi ...

. 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 The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of la ...

global debt database. Data for 2020. Private debt:

global debt database. Data for 2020. 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. All other data are from the

World bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...

with data for 2020. GDP: Most data are from

World Economic Outlook Database, 2022. Data for Afghanistan, Cuba, Lebanon, Pakistan, Syria, Ukraine, and World are from the

with data for 2020 or 2021. The data for North Korea are copied from

Economy of North Korea The economy of North Korea is a Central planning, centrally planned economy, following ''Juche'', where the role of market allocation schemes is limited, although increased to an extent. , North Korea continues its basic adherence to a centrali ...

. The money supply data are from the

with data for 2020.

Consequences of high debt

There is more debt in the world than there is money in circulation. The ratio of total debt to

money supply In macroeconomics, money supply (or money stock) refers to the total volume of money held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation (i ...

ranges from 1.7 in

Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...

and

Switzerland Switzerland, officially the Swiss Confederation, is a landlocked country located in west-central Europe. It is bordered by Italy to the south, France to the west, Germany to the north, and Austria and Liechtenstein to the east. Switzerland ...

to 4.7 in

Denmark Denmark is a Nordic countries, Nordic country in Northern Europe. It is the metropole and most populous constituent of the Kingdom of Denmark,, . also known as the Danish Realm, a constitutionally unitary state that includes the Autonomous a ...

and

Iceland Iceland is a Nordic countries, Nordic island country between the Atlantic Ocean, North Atlantic and Arctic Oceans, on the Mid-Atlantic Ridge between North America and Europe. It is culturally and politically linked with Europe and is the regi ...

. 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. Economists prefer to look at the ratio of debt to the GDP. This ratio ranges from 1.5 in

Latvia Latvia, officially the Republic of Latvia, is a country in the Baltic region of Northern Europe. It is one of the three Baltic states, along with Estonia to the north and Lithuania to the south. It borders Russia to the east and Belarus to t ...

to 5.0 in Luxemburg. The world total is 3.5, according to the

Institute of International Finance The Institute of International Finance (IIF) is the association or trade group for the global financial services industry. It was created by 38 banks of leading industrialized countries in 1983 in response to the international debt crisis of the ...

. 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 Compound interest is interest accumulated from a principal sum and previously accumulated interest. It is the result of reinvesting or retaining interest that would otherwise be paid out, or of the accumulation of debts from a borrower. Compo ...

while the credit money has not been increased. Most of the excess debt thus originates from compound interest of bank credit. 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. In fact, the global debt has grown by approximately 6% per year during the period from 2015 to 2021. The debt may be paid down if the rate of

economic growth In economics, economic growth is an increase in the quantity and quality of the economic goods and Service (economics), services that a society Production (economics), produces. It can be measured as the increase in the inflation-adjusted Outp ...

exceeds the

interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, ...

. However, this is unlikely to happen as long as the

rate of return In finance, return is a profit on an investment. It comprises any change in value of the investment, and/or cash flows (or securities, or other investments) which the investor receives from that investment over a specified time period, such as i ...

capital Capital and its variations may refer to: Common uses * Capital city, a municipality of primary status ** Capital region, a metropolitan region containing the capital ** List of national capitals * Capital letter, an upper-case letter Econom ...

investment Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...

is greater than the rate of

. A further reason why this is unrealistic is, as

environmentalist Environmentalism is a broad Philosophy of life, philosophy, ideology, and social movement about supporting life, habitats, and surroundings. While environmentalism focuses more on the environmental and nature-related aspects of Green politics, g ...

s argue, that perpetual growth on a finite planet is not sustainable. The debt may be undermined if the

inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...

rate exceeds the interest rate, but inflation also raises the prices of real estate and other

asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...

s, resulting in more new debt to finance housing costs. A high inflation rate leads to low

consumer confidence Consumer confidence is an economic indicator that measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. If the consumer has confidence in the immediate and near future ...

, high

unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is the proportion of people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work du ...

, and economic instability. The fast growing debt is a consequence of the current

financial system A financial system is a system that allows the exchange of funds between financial market participants such as lenders, investors, and borrowers. Financial systems operate at national and global levels. Financial institutions consist of comple ...

that leads to an unbalanced and uncontrolled growth of money and debt. There is a distorted balance between public and private interests with insufficient democratic accountability, according to a Dutch government report. A high level of debt makes the economy unstable with risks of

economic crises A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and ma ...

. 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 Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance. The financ ...

, while the general public bears the costs during the subsequent bust in the form of

bankruptcies Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...

, bank bailouts,

, and home evictions. For example, farmers in India are being forced to sell their farm and land because of inescapable debt (see

Farmers' suicides in India Farmers' suicides in India refers to the event of farmers dying by suicide in India since the 1970s, due to their inability to repay loans mostly taken from private landlords and banks. India being an agrarian country with around 70% of its rura ...

Consequences of high external debt

External debt consists of government debt to foreign countries as well as private debt in foreign

currencies A currency is a standardization of money in any form, in use or currency in circulation, circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use wi ...

. External debt is different from domestic debt because it affects the

trade balance Balance of trade is the difference between the monetary value of a nation's exports and imports of goods over a certain time period. Sometimes, trade in services is also included in the balance of trade but the official IMF definition only consi ...

. 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. While the government can control the internal debt through its

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...

and

fiscal policy In economics and political science, fiscal policy is the use of government revenue collection ( taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variab ...

, it has fewer means to control the external debt. A high external debt can lead to

sovereign default A sovereign default is the failure or refusal of the government of a sovereign state to pay back its debt in full when due. Cessation of due payments (or receivables) may either be accompanied by that government's formal declaration that it wil ...

, especially for poor countries with limited

export An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is a ...

. 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. 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. Private banks earn rents from the circulation of money because most of the money in circulation originates from bank credit. An imbalance results if money created in one country is used for circulation in another country.

Currency substitution Currency substitution is the use of a foreign currency in parallel to or instead of a domestic currency. Currency substitution can be full or partial. Full currency substitution can occur after a major economic crisis, such as in Ecuador, El S ...

, i.e. payment in foreign currencies, is common in countries with a weak currency. As far as the currency that circulates internationally originates from bank credit, it provides a

seigniorage Seigniorage , also spelled seignorage or seigneurage (), is the increase in the value of money due to money creation minus the cost of producing the additional money. Monetary seigniorage is where government bonds are exchanged for newly create ...

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. This exacerbates the situation in poor countries, making them vulnerable to increasing external debt, inflation, and economic crises. Similar problems appear in countries that do not have their own currency. For example, the high external debt and

financial crises A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with Bank run#Systemic banki ...

Greece Greece, officially the Hellenic Republic, is a country in Southeast Europe. Located on the southern tip of the Balkan peninsula, it shares land borders with Albania to the northwest, North Macedonia and Bulgaria to the north, and Turkey to th ...

Italy Italy, officially the Italian Republic, is a country in Southern Europe, Southern and Western Europe, Western Europe. It consists of Italian Peninsula, a peninsula that extends into the Mediterranean Sea, with the Alps on its northern land b ...

Spain Spain, or the Kingdom of Spain, is a country in Southern Europe, Southern and Western Europe with territories in North Africa. Featuring the Punta de Tarifa, southernmost point of continental Europe, it is the largest country in Southern Eur ...

, and several other

Eurozone The euro area, commonly called the eurozone (EZ), is a Monetary union, currency union of 20 Member state of the European Union, member states of the European Union (EU) that have adopted the euro (Euro sign, €) as their primary currency ...

countries in the aftermath of the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

was partially due to their lack of monetary autonomy and inability to control the money supply.

References

{{Reflist Debt

Debt by country and region

Consequences of high debt

Consequences of high external debt

See also

References