NextGen Day

With looser monetary policies to assist economies, global loans exceeded USD300 trillion at the end of the first quarter of this year, while the dollar index grew by 8%.

Government incentives to households and vulnerable sectors at record levels to recover declining demand due to the pandemic in the global economy resulted in a large increase in public debt.

Since the commencement of the Russia-Ukraine war on February 24, supply chain problems have worsened, disrupting global trade, which was already hampered by the pandemic.

The dollar was strengthened during this process as investors sought safe havens in an atmosphere of rising inflation and interest rates.

The dollar index has grown by 8% to 103 since the beginning of the year, owing to factors such as the Fed’s aggressive interest rate hike predictions, the US economy’s greater recovery compared to other nations, and the retention of its appeal in terms of capital flows.

The pressure on developing country currencies rose during this period, as the index reached its highest level in 20 years with 105.

When the rise of the dollar was combined with already-high public debt levels, financial constraints in many countries, particularly in industrialized countries, became serious.

The United States is the most indebted country on the planet.

The strengthening of the dollar helps the United States lower its import costs, while other nations’ export competitiveness aids the process of lowering inflationary pressures.

It’s worth noting that political reactions to the dollar’s surge and the escalating “trade wars” have yet to emerge.

Meanwhile, given the dismal state of the global economy, the dollar’s growing dominance over other currencies poses a threat to other countries’ welfare and the currently unstable financial markets.

According to estimates issued by the Institute of International Finance, global debt reached USD305.3 trillion in the first quarter, up UST3.3 trillion from the same period the previous year.

The US Debt Clock’s data also revealed that the US is the world’s most indebted country, with UST30.5 trillion in debt. With USD14.9 trillion, Japan came in second, followed by China with USD10.6 trillion.

Italy has USD3.8 trillion in debt, France has USD3.6 trillion, Germany has USD3.4 trillion, the UK has UST3.3 trillion, India has UST2.3 trillion, and Brazil and Canada each have UST1.9 trillion.

While the total debt of these ten countries topped UST76 trillion, this figure meant that they accounted for one-fourth of all world indebtedness.

Japan is anticipated to rank first among industrialized countries with the greatest public debt ratio to national revenue by the end of this year, according to the IMF’s World Economic Outlook Report issued in April.

Japan was followed by Greece (185 percent), Italy (151 percent), Singapore (131 percent), the United States (126 percent), Portugal (122 percent), Spain (116 percent), France (113 percent), Belgium (107 percent), and Canada (102 percent).

The negative consequences on the debt dynamics of developing and low-income nations will be exacerbated by economic development, which is predicted to weaken significantly this year.

The continued rise in the dollar for low-income countries may result in social concerns like default and hunger, given the growth in food and energy expenses.

According to the data, the ratio of public debt to national income in Sudan is predicted to reach 284 percent by the end of this year, up from 184 percent at the end of 2021 due to the country’s political instability.

Sudan has therefore overcome Japan, which has been in first place globally in terms of indebtedness to national revenue for years.

Cabo Verde is second with 159 percent after Sudan, Eritrea is third with 152 percent, and Bhutan is fourth with 134 percent.

This ratio is expected to be 94 percent in Egypt, 92 percent in Brazil, 87 percent in India, 78 percent in China, 76 percent in Hungary, 74 percent in Argentina, 71 percent in Pakistan, 44 percent in Turkey, and 17 percent in Russia by the end of 2022.

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