HOW LARGE IS SOVEREIGN DEBT?

Its burden on developing countries is growing twice as fast as on developed countries

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SOVEREIGN DEBT or public debt, as the International Monetary Fund (IMF) describes it, refers to borrowings by governments to confront hardships and invest in public goods and services that support development, such as education, healthcare and energy systems, complementing revenues raised through general taxation. The governments may borrow from within their country or from abroad, with creditors ranging from local private institutions and households to other countries, development banks or multilateral institutions, and private investors. Governments can also “guarantee” debt for private entities, taking on the obligation to repay the loan if the debtor is unable to. Such publicly guaranteed debt is used strategically by governments to lower costs for investments that support their policy objectives.