UNCTAD’S REPORT ON GROWING PUBLIC DEBT

 

UNCTAD’S REPORT ON GROWING PUBLIC DEBT

§  ‘A World of Debt Report 2024: A growing burden to global prosperity’ released by UN Trade and Development (UNCTAD)

§  Report highlights alarming surge in global public debt and proposes a plan to revamp global financial system to tackle current debt crisis.

§  Public debt refers to general government domestic and external debt.

Key highlights of Report

§  Debt surge: In 2023, global public debt reached historic peak of $97 trillion.

§  Drivers: Cascading crises and sluggish and uneven performance of global economy.

§  Regional Disparity: Public debt in developing countries (accounting for 30% of global total) is rising at twice the rate of developed countries.

§  In 2023, India’s public debt reached US$ 2.9 trillion, accounting for 82.7% as a share of GDP.





What are the implications of high public debt?

§  High levels of public debt can lead to several economic challenges.

§  It may increase the burden of interest payments, diverting funds from essential services. Additionally, excessive debt can strain fiscal sustainability, leading to higher taxes, inflation, or cuts in public spending.

§  Moreover, it may negatively impact investor confidence and hinder long-term economic growth.

How does public debt affect future generations?

§  High levels of public debt can burden future generations by requiring them to pay off the debt through higher taxes or reduced government services. This can limit their economic opportunities and impose constraints on policy choices.

§  Moreover, escalating debt levels may constrain investments in education, infrastructure, and other areas critical for future prosperity.

 

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