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Countries are in debt. The UN warns that this hinders the development of poorer countries

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Is the world falling into a debt spiral? The latest UN report leaves no doubt – the world economy is growing slower than it is indebted. In addition, developing countries have to pay higher interest rates than developed countries to catch up. Where is Poland on the debt map? It’s hard to say because the Polish government circumvents the spending rule and takes expenses outside the budget.

The total debt of all countries in the world is 92 trillion dollars. According to the United Nations, the domestic and foreign debt of countries has increased more than five times in the last two decades. Half of our world is plunged into a development catastrophe fueled by a crushing debt crisis. More than 3 billion people, or nearly half of humanity, live in countries that spend more on paying interest on debt than on education or health care, UN Secretary-General Antonio Guterres said.

The most indebted country in the world is the United States with a public debt of over $30 trillion. In the European Union, France has the most to give – over 3 trillion dollars. China owes more than $13 trillion, Japan more than $11 trillion and the UK $3.15 trillion.

When we relate the debt to the size of the national economy, the infamous record holder is Japan – last year its debt amounted to over 260 percent of GDP. In the case of Greece, it is 171 percent.

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Is borrowing necessary?

Who do countries borrow from? From other countries or on the so-called market, and therefore from banks or their citizens by issuing bonds.

Is it possible to govern today without borrowing money? Probably possible, but it wouldn’t make much sense. There are several advantages to borrowing money by governments. Firstly, loans enable much larger investments – for example in roads. Secondly, they allow you to maintain payroll obligations for a given year: salaries for teachers or pensions, even if the economy has slowed down and tax revenues have decreased – explains Geoff Gottlieb, representative of the International Monetary Fund for Central and Eastern Europe.

The problem arises when the cost of credit suffocates the economy. Interest on debt is becoming a growing global problem, according to the UN. The poorer the country, the higher the interest it borrows.

– Some of the poorest countries in the world are forced to choose between servicing their debt and serving their citizens. They do not have the space to make the necessary investments in sustainable development goals or the transition to renewable energy. The level of public debt is staggering and growing rapidly, informs Antonio Guterres.

Is there a country without public debt? Yes, almost. This is Brunei – the debt of this Asian sultanate is only 2-3 percent of GDP.

Indebted Poland

Where is Poland on the world debt map? It depends. The PiS government shows a different public debt to Poles than to Brussels. According to the Polish methodology, it is PLN 1,200 billion, and according to the EU methodology, it is over PLN 300 billion more. The second method takes into account money that is not in the state budget and is beyond parliamentary control. This shows the scale of spending that the government is channeling into existing or specially created funds.

This graph speaks to the imagination – public debt per one Pole. The official debt is PLN 32,000 per head. The debt including extra-budgetary expenses is as much as PLN 8,000 higher.

Public debt per capita in PolandRepublic

– What paradoxically saves us, our government, is high inflation. Because high inflation makes life easier for the debtor. High inflation actually means that the government shifts part of its debt onto us – explains economist Prof. Witold Orlowski.

High inflation means higher tax revenues, so public debt is falling in relation to GDP – this year, according to the government, it will amount to 47 percent, maybe 48 percent of GDP. It looks much worse when we look at the amount of interest on public debt that Poland has to pay. This year it will be about PLN 70 billion, which is several billion more than the annual cost of the promised “Family 800 plus” programme.

Facts about the world TVN24 BiS

Main photo source: Facts about the world TVN24 BiS

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