How to Deal with Global Debt? A way out!

global debt

Global debt today is equivalent to 225 per cent of global GDP. This is and should be the main concern of countries today. The devil of global debt has somehow infected all the major and minor economies of modern time. The responsible contributors to such rise in global debt are the advanced economies. Nevertheless, emerging market economies have been responsible for most of the increase in the last ten years. So, what are the possible solutions?

Global Debt

  • Printing more money to take care of the demand is no more appropriate. This mechanism of fiscal policy is further drowning the economic systems of both developed and developing countries.
  • For developing nations, international financial systems like the IMF suggest that these countries should work on the taxation policy. Developing nations need to strengthen their tax capacity.
  • Developing nations are suffering the most due to global debt. Global debt is reducing their ability of economic growth as the revenues are used to service the payments and the development sectors of the countries remain stagnated. For this, rich countries should provide aid to the poor countries not in for of aid but in the form of grants to make them capable of paying the debt in the future.

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