Unmasking the Global Financial Reality - An urgent call for fiscal responsibility

Three key parameters of Financial health - Total Debt that is borrowings including interest, Debt to GDP ratio that is the ability or inability to service the accumulated debt sustainably, and the Inflation which is year over year erosion of purchasing power - directly and indirectly impacts not only every nation’s international sovereign financial status & strength, but also translates down, right up to the well-being of its Citizenry.

$307 Trillion global debt now, up from $255T pre COVID pandemic level, Debt to GDP ratio of 350% now up from 226% pre pandemic level against a normally recommended level of 60% generally, and global inflation at 6.9% against 3.5 % pre pandemic level – reflects a great concern on the quality of fiscal management being exercised at National & International levels, particularly on rising borrowings by Governments and erosion of purchasing power in the hands of public due to pressure of inflation. The high level of Debt-GDP ratio, if unsustainable, simply points to higher sovereign default risk, with its cascading well-known effects all through the financial system outside and within the concerned Nation.
Undoubtedly from above, the Debt emerges as a key area of attention.
Breaking down thus the global debt into its various constituents or components for better understanding is vital. Today, the global borrowings by Governments stands at $92 Trillion up from $70 Trillion, Corporate Debt at $85 Trillion up from $75 Trillion, Household Debt at $55Trillion up from $47 Trillion, Financial sector debt at $6 Trillion up from $5 Trillion and Emerging Market debt at $30 Trillion up from $25 Trillion. This comparison is to give a glimpse between pre & post pandemic situation.