The burden is unsustainable and could destabilize the financial system, Roscongress has warned
© Chansak Joe
US government debt and Washington’s budget deficit present the biggest threats to the global economy this year, Russian government agency Roscongress has warned.
The $34 trillion owed by Washington is mathematically impossible to pay off, Roscongress has claimed in a report it published on Wednesday. The agency based its estimate on the current ratio between the size of the debt, the rate at which it is growing, and budget revenues.
“The excessive debt was accumulated at low rates but needs to be refinanced at high rates that limit economic activity and reduce cash flow. In the medium term, the servicing of US debt will cost $1 trillion a year,” reads the report, titled ‘Key Events – 2024. Geoeconomics. Forecasts. Major risks’.
The US government cannot solve the problem by restarting the printing press this year because that would lead to higher inflation, the report added. The country saw consumer prices shoot up to the highest levels in decades in 2022, prompting the Federal Reserve to embark on a series of rate hikes to tame inflation.
US government federal debt toped $34 trillion for the first time in history at the end of December. It now amounts to about $102,000 for every man, woman, and child in the country. US total public debt is roughly equivalent to the economies of China, Germany, Japan, India, and the UK combined, as pointed out by the Peter G. Peterson Foundation, a nonpartisan fiscal policy group in New York.
Among other threats to the global economy, Roscongress identified the global real estate bubble, mentioning the high-profile bankruptcies of Chinese property developers Country Garden and Evergrande; the volatility of the US stock market; and demographic issues, namely the shrinking of China’s population.
The Roscongress Foundation was established in 2007 and is a key organizer of nationwide and international congresses and exhibitions with an economic and social focus. Among the events it hosted recently is the Russia-Africa forum in St. Petersburg in July, a high-profile international gathering attended by dozens of delegations from African nations.
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