$29 Trillion: That’s How Much Debt Emerging Nations Are Facing
A decades-long crisis is getting worse, and now dozens of nations are spending more on interest payments than on health care or education.
By Patricia Cohen, The New York Times, June 14, 2024
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Emerging nations are contending with a staggering $29 trillion in public debt. Fifteen countries are spending more on interest payments than they do on education, according to a new report from the United Nations Conference on Trade and Development; 46 spend more on debt payments than they do on health care.
Unmanageable debts have been a recurring feature of the modern global economy, but the current wave may well be the worst so far. Overall, government debt worldwide is four times higher than what it was in 2000…
Today, the world’s public debt is not only larger, it is different. Then, the debt was held largely by a handful of major banks from Western countries and decades-old international development organizations. Today, on top of those established players, countries must contend with thousands of private lenders and additional official creditors like China, as well as a variety of sometimes secret loan agreements governed by different national regulations… There is no international referee with authority over all the lenders — the equivalent of a bankruptcy court — to adjudicate disputes…[end quote]
The five largest borrowers are Ukraine, Egypt, Argentina, Ecuador and Pakistan.
There hasn’t been a large-scale debt default crisis that impacted U.S. markets since 2010 when the EU managed to pull out of its tail spin before it crashed. The 1997 Asian financial crisis didn’t impact the U.S. stock market which was in an inflating bubble though it led to a tiny increase in financial stress.
It’s hard to say how today’s immense third world debt will impact the financial markets. Could it be the next black swan? It’s more probable that the burden will lead to a gradual grinding down of the world economy without a sudden crisis event.
Wendy
Argentina has been a financial basket case as long as I can remember. The news last night reported rioting in Argentina, over the new President’s economic plan: sounds like “supply side” to me: cutting pay and pensions for the Proles.
Ukraine was a wretchedly manipulated and corrupt nation before it began to lurch towards the West and EU membership, triggering Russian invasion. It is in a war for survival, and has the long term capability to survive, thrive, and repay: a cohesive educated population with stunningly adept productive history, agricultural wealth, advanced technical capabilities. But many a slip from cup to lip.
Egypt?!!! Catastrophe on steroids, and a pawn of wealthy nations who have been paying off the militarily dominated leadership because Egypt’s population is relatively huge and if mobilized potentially dangerous. Where is $$$ going? Not to desperately needed agricultural renewal (Aswan high dam is silting up, and robbing the staggeringly rich soils downstream of fertitlity), and a peak of spendthrift insanity literally beyond belief (for me anyway) New Administrative Capital - Wikipedia
Ozymandias would gasp and die of envy, over-awed.
Argentina?!!! Perpetual habitual basket case for over a century, a nation of immense resources repetitively wasted.
Ecuador? Political corruption and madnesses, ethnic chaos, and bad planning engulfing investments ranging from petroleum extraction to bubbled USA expat communities.
Pakistan: Take all the problems of Egypt, plonk down next to ferociously dangerous powerful angry neighbor India, throw in almost insane levels of religious fervor and hatred, destruction of key agricultural capabilities due to both GCC related flooding and salting of soils, and voila!, and do not forget their ability to sell and use nuclear weapons tech.