SOGEI website background

The Risks of the High Government Debt for Central Asia

The Risks of the High Government Debt for Central Asia

Increasing levels of debt became a common concern for many advanced and developing countries. Debt-to-GDP ratios are historically high in the United States, Germany, France and other advanced economies. Rapid growth of government expenditure as the result of many social programs, lower tax revenues, increasing share of elders among population and political problems caused budget deficits and higher amount of debt [Yared, 2020]. This year, despite significant reduction of economic activity due to the pandemic-induced lockdowns, more than 100 developing countries will still have to pay a combined $130 billion in debt service. Expenditures for debt service will worsen their economic performance. As a result, many of them can default, while others will postpone much needed social expenditure.