DEMO — development content for layout testing. Not real editorial reporting.
DEMO content for development and layout testing — not real editorial reporting.
The path of the debt ratio depends on the difference between the interest rate paid and the economy’s growth rate, and on the primary budget balance.
How it works
When growth exceeds interest costs, debt ratios can stabilise even with modest deficits; when interest costs exceed growth, surpluses are needed.
Whether a government’s debt is sustainable depends on a few interacting variables, not on any single threshold.
What to watch
Maturity structure, currency of borrowing and who holds the debt affect vulnerability to shocks.
Key concepts
- Public debt
- Fiscal policy
