Kazakhstan and Kyrgyzstan Lead the Way
Global Government Debt Expected to Surpass $100 Trillion by 2024, IMF Projects
According to the latest projections by the International Monetary Fund (IMF), global government debt is set to exceed $100 trillion by the end of 2024, representing around 93% of the world’s GDP. The IMF report highlights that in Central Asia, Kazakhstan has the highest nominal amount of state debt, while Kyrgyzstan leads in debt relative to its GDP.
The IMF’s forecasts also indicate a concerning trend, with total government debts potentially reaching 100% of global GDP by 2030. Experts caution that the actual debt burden could surpass current estimates, necessitating substantial financial adjustments to stabilize or reduce it.
Several factors contribute to this worrying debt trend. Significant political and social pressure to increase spending, overly optimistic debt projections, and a substantial shadow economy that contributes to unrecorded debt are some of the primary drivers behind the rising levels of national debt in many countries.
The IMF points to factors such as increased spending on defense and energy security, demographic shifts, healthcare demands, the transition to a green economy, climate change adaptation, and geopolitical tensions as major influencers of the growing national debt levels worldwide.
Central Asia, in particular, is facing its own challenges on the debt front. As of July 1, 2024, Uzbekistan’s national debt has surged to over $37 billion for the first time, with a significant increase in external debt in recent years. The country’s debt levels relative to GDP have also risen sharply.
In terms of state debt levels and their share of GDP, as of January 1, 2024, the situation in Central Asian countries is as follows:
– Kazakhstan: $59.8 billion, 23% of GDP
– Uzbekistan: $34.9 billion, 34.4% of GDP
– Kyrgyzstan: $6.2 billion, 45.2% of GDP
– Tajikistan: $3.6 billion, 30.2% of GDP
– Turkmenistan: Approximately $3.8 billion, 5% of GDP
To address the escalating debt levels, Uzbekistan has implemented a “Law on State Debt,” establishing a maximum debt limit of 60% of GDP. Similar measures are in place for Kazakhstan, Kyrgyzstan, and Tajikistan, with recommendations for maintaining specific debt limits.
As global government debt continues to climb, countries around the world will need to implement prudent financial management strategies to ensure economic stability and long-term sustainability. The IMF’s warnings serve as a reminder of the importance of addressing the root causes of the escalating debt burden to prevent a financial crisis in the future.
