The urgency of global debt reform

HIGH debt levels are once again setting off alarm bells around the world. In developed countries, attention is focused on the rapid increase in public debt, while developing economies are struggling to service their external obligations amid slowing growth and stagnating exports.

Despite their current challenges, most analysts believe that developed economies will avoid a full-blown crisis, owing to their ability to issue debt in their own currencies and implement targeted fiscal and monetary measures. In the United States, for example, the fiscal deficit surpassed 6 per cent of GDP this year and is projected to rise to 8 per cent or more in 2025.

Even so, declining interest rates suggest that policymakers are well-positioned to address the issue, which received little attention during the 2024 election cycle.