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| Govt debts crossed $41 trillion globally in 2010: McKinsey |
| Press Trust of India / New Delhi Aug 15, 2011, 13:24 IST |
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 The total amount of debt incurred by governments across the world jumped to a staggering $41.1 trillion last year, accounting for 69% of the global GDP, because of stimulus packages and anaemic economic growth, says a report.
Many governments, especially in the developed world, have resorted to massive stimulus measures to bolster their economies since the 2008 global financial meltdown.
"Public debt outstanding (measured as marketable government debt securities) stood at $41.1 trillion at the end of 2010, an increase of nearly $25 trillion since 2000.
"This was the equivalent of 69% of global GDP, 23 percentage points higher than in 2000. In just the past two years, public debt has grown by $9.4 trillion -- or 13 percentage points of GDP," global consultancy McKinsey said.
Last year alone, government debt accounted for about 80% of the overall growth in total outstanding debt.
According to the McKinsey report, government debt worldwide was $31.7 trillion in 2008.
The report pointed out that budget deficits have increased due to stimulus packages and loss of revenues due to anaemic growth.
"Pension and healthcare costs are increasing as populations age and unfunded pension and healthcare liabilities are not reflected in current government debt figures. Without fiscal consolidation, government debt will continue to increase in the years to come," it noted.
The report was prepared by McKinsey Global Institute (MGI), the business and economics research arm of McKinsey.
Meanwhile, overall outstanding debt worldwide has more than doubled in the past 10 years to $158 trillion in 2010.
In 2000, the same stood at $78 trillion.
"Debt also grew faster than GDP over this period, with the ratio of global debt to world GDP increasing from 218% in 2000 to 266% in 2010," McKinsey said.
Around $48 trillion of the total debt outstanding was that of governments and financial institutions.
In both the US and Western Europe in 2010, the ratio of public debt stood at more than 70% of the GDP, the report said.
"With budgets under pressure from both short-term crisis-related measures and long-term pressures on growth and calls on the public purse (including ageing populations in many countries), developed countries may need to undergo years of spending cuts and higher taxes in order to get their fiscal house in order," it added
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