Public Debt; Silent Threats Threatening the Global Economy

Public debt is like a double-edged sword used by governments around the world to stimulate the economy in times of hardship, but when it is used too often, it can become a heavy burden on the economy in the long run. The soaring public debt in many countries is one of the most important economic challenges today.

The Cause of Soaring Public Debt

Economic Stimulus: Public spending to stimulate the economy during the economic downturn, such as the global economic crisis or the COVID-19 outbreak, has been the main factor that has increased public debt.
Public Service: The increase in the cost of public services such as social welfare, education, and public health caused the government to incur debt to cover these costs.
Economic Slowdown: When the economy slowed down, government revenues declined, but expenses remained high, forcing the government to borrow money to compensate for the spread.
A Low Interest Rate: During the low interest rate period, many governments choose to borrow money to invest in projects, causing public debt to increase.

The Impact of High Public Debt

An Interest Burden: Higher public debt will result in the government paying a lot of interest, which will squeeze away the budget that should be used for national development.
A Decline in Competitiveness: High debt burdens will affect investor confidence, thus increasing government borrowing costs and adversely affecting the country’s competitiveness.
Debt Default Risk: If the public debt becomes too high, the government may be at risk of debt default, which will adversely affect the national economy and financial system.
The Obstacle in Policy Implementation: High public debt will limit the government’s ability to implement policies such as investing in infrastructure or increasing social welfare.

The Remedy of Public Debt

Cut Down Expenses: The government must find ways to reduce unnecessary expenses and increase budget efficiency.
Increase Income: The government must find ways to increase state income, such as restructuring taxes or finding new sources of income.
Reform a State Enterprise: Reform of state enterprises to increase efficiency and reduce public debt.
Economic Growth: Promoting economic growth will help increase government revenue and reduce the debt-to-GDP ratio.

The public debt problem is complicated and takes time to solve. The problem requires cooperation from all sectors, including the government, the private and public. Proper and sustainable policies will be key to solving the public debt problem and securing the economy in the long run to reduce problems and other factors that may arise later.

References from
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