The debt danger
Over the last 15 years, public debt to GDP has risen from 70% to 130% on average in the advanced countries. This has required, in part, the support of monetary policies. It is understandable that this development raises concerns and a whole series of questions:
- Are there limits to the indebtedness of states, and which indicators should be used to judge this: debt rates or interest charges as a proportion of GDP? Should we take into account the origins of the debt?
- Under what conditions are public debts sustainable today in the advanced countries? And to what extent is there still room for additional debt?
- What policies are desirable to ensure the stabilisation of debt rates in the long term: limiting deficits (by controlling expenditure, increasing compulsory levies?), daring inflation, trying to stimulate growth through investment (and a little more public debt?)?
Fondation Européenne d'Etudes Progressistes (FEPS)
Moodys Investors Services, Sovereign Risk
Banque Centrale d'Irlande