Since the beginning of 2022, the total amount of the state debt of Ukraine has increased 2.2 times, reaching a record level of 6.01 trillion hryvnias at the end of April this year. It is expected that in 2024 the size of our country’s debt obligations will be 94% of GDP. Read on to find out whether these figures are catastrophic and how the economy can cope.
Dynamics of the state debt of Ukraine
First of all, it is worth noting that such a jump in the size of the public debt is a completely normal phenomenon for crisis stages. For a country that has been at war for more than two years, Ukraine is holding up quite well, and the more than two-fold increase in debt obligations is not only related to rising costs, but also to fluctuations in the hryvnia exchange rate. If we look at the dynamics of borrowing in dollars, the overall picture looks more optimistic.
On April 30, Ukraine had debt obligations in the amount of 151.5 billion US dollars. Since the beginning of the full-scale war, this indicator has increased by 58.2 billion dollars, or 62.4%.
Usually, in the economy, the severity of the debt burden on the country is determined by the ratio of the amount of national debt to GDP. If in 2021, in the case of Ukraine, this ratio was 49%, then this year it may reach 94%.
Note that the issue of repayment of the main part of the state debt will be considered only after the end of the war. In order to avoid non-fulfillment of debt obligations and default, Ukraine will extend the term of debt repayment and try to restructure it – to write off part of the obligations by taking on new ones. The exact terms of the postponement or restructuring will be known already in August.
After the war, reparations can significantly reduce the size of the national debt. And already at the beginning of 2025, providing Ukraine with a preferential loan in the amount of 50 billion US dollars can be a significant help in paying off debts. The source of these funds is interest from frozen Russian sovereign assets, which are kept in banks of various countries.
Indicators of other countries
In fact, most countries in the world have external borrowing. This is normal – loans are the fuel that makes economies grow faster and more productively. The main thing is to be able to fulfill debt obligations.
Today, the country with the largest national debt in monetary terms is the USA. The total amount of the country’s debt is more than 30 trillion dollars.
China is in second place by a large margin. China’s national debt is $13.77 trillion. Also, the top 10 countries with the largest debts include Japan ($12.78 trillion), Great Britain ($3.14 trillion), France $3.11 ($ trillion), Italy ($2.91 trillion), Germany (2, 70 trillion dollars), India ($2.64 trillion), Canada ($2.3 trillion) and Zimbabwe ($1.91 trillion).
If we take the ratio of debt to GDP, then Lebanon and Japan – countries whose debt obligations are several times higher than GDP – are in first place. At the same time, the USA is only in twelfth place.
Top 20 countries with the highest public debt:
| Country | % of GDP |
| Lebanon | 349,88% |
| Japan | 255,07% |
| Sudan | 187,88% |
| Eritrea | 179,66% |
| Greece | 172,6% |
| Singapore | 167,5% |
| Cape Verde | 147,58% |
| Italy | 141,7% |
| Venezuela | 133,61% |
| Bhutan | 127,33% |
| Barbados | 122,51% |
| the United States | 121,31% |
| Surinam | 119,64% |
| Bahrain | 117,58% |
| Maldives | 114,37% |
| Portugal | 112,4% |
| France | 111,8% |
| Spain | 111,6% |
| Canada | 107,38% |
| Belgium | 104,3% |
Source: worldpopulationreview.com
World debt: the threat of a new economic crisis
If everything is not so pessimistic about Ukraine’s debt, the size and rate of growth of world debt is a cause for concern. According to the results of the first quarter of 2024, it reached a record mark – 315 trillion US dollars. This is almost three times more (288%) than the total world GDP.
At the same time, public debts account for 91.4 trillion dollars, business loans – 164.5 trillion dollars, and household loans (mortgages, card obligations, etc.) – 59.1 trillion dollars.
Over the last quarter, the debt increased by $1.3 trillion. Currently, the rate of increase in global debt is the fastest since the end of World War II. Since 2010, we have been witnessing the fourth wave of acceleration in the growth of global debt obligations, which has accelerated even more after the corona crisis. All such accelerations in the 80s, 90s, and in 2008 ended with global financial crises.
Lessons learned since 2008 have helped reduce the number of risky loans. However, wars in various regions of the world (Ukraine, Israel, etc.), the pre-crisis state of the housing lending market in China, and other factors indicate that another global financial crisis cannot be avoided. Although this is unlikely to happen in the short term.
