According to the OECD’s Global Debt Report, almost 45 percent of the sovereign debt of OECD member countries (38 of the most advanced capitalist countries) will mature by 2027. The equivalent amount in so-called ‘emerging countries’ is 40 percent; whereas for ‘low income and high risk countries’ it is 50 percent. Added to this, roughly one-third of all outstanding corporate bond debt will mature in the same period.

　　A large proportion of all this debt was issued in the previous decades, when interest rates were considered ‘ultra-low’. For example, borrowing costs on fixed-rate bonds were on average less than one percent in 2020-21, two percent in 2022, rising to four percent in 2024.

　　As a result, governments and corporations will be hit with a dramatic increase in borrowing costs when they are forced to refinance their debts over the coming years. This means governments, already straining under the weight of their existing debts, will face significant black holes in their budgets in the next period.

　　Indeed, most advanced capitalist countries are already running large budget deficits, as their spending commitments far outstrip their tax revenues. For example, according to the IMF, Germany’s net borrowing as a percentage of GDP is currently -3, Britain’s is -4.4, France’s is -5.5, and the USA’s is -6.5.

　　As has already been mentioned, the interest payments of these countries on their existing debts run into the tens or even hundreds of billions of dollars. These governments are therefore in effect borrowing money to pay the interest on their previous borrowing. When interest rates were close to zero, this wasn’t such a problem. But now, with interest rates rising, this setup is pregnant with crises.

　　Added to this mix is the fact that most European countries are planning on significantly increasing their ‘defence’ spending, as a result of pressure from Trump, and the breakdown of the post-war liberal world order. At the same time, they are facing increased pressure to raise social spending as a result of ageing populations and rising unemployment.

　　Editor: Zhong Yao  Deng Panyi

　　From:https://communist.red/global-debt-a-ticking-time-bomb/(2025-6-13)