In recent years, countries' debt burdens, especially their public debt, have become increasingly discussed. The debt burdens of countries like the US, China, France, and Japan are unsettling markets. In fact, this issue had ceased to be a significant problem for developed countries in the last quarter century. Debt sustainability had been a problem faced more by developing countries. Now, the sustainability of developed countries' debt is being questioned. According to the World Bank's debt dataset, the ratio of gross public debt to national income in G7 countries is 123%. During the pandemic, this ratio reached 258% in Japan before falling to 236% in 2024. In the US, this ratio, which was 108% in 2019, rose to 120.8% last year. Another problematic country is France. In this country, the debt stock, which stood at 98% before the pandemic, rose to 113% in 2024. Germany is one of the least problematic developed countries in terms of public debt. The debt stock in 2024 was 65.4%. In the UK, the ratio is 101%.

Among developing countries, Turkey and Russia have the lowest public debt. The ratio of public debt to national income in these countries is 26% and 20%, respectively. This ratio is 81% in India, 87% in Brazil, 85% in Argentina, and 60% in Mexico. The average for developing countries is around 70%. As the data shows, the public debt stock appears to be more vulnerable to sustainability in developed countries. Furthermore, debt rollover is also related to the depth of markets. For example, Japan has a very high public debt stock, but it also has a large savings pool to roll over. This is not always the case for all developing countries. The relatively shallow market structure of developing countries makes debt sustainability difficult even with low public debt levels. Therefore, while the level of the debt stock is an important indicator of sustainability, it is not a sufficient indicator.

High public debt can negatively impact economies through various channels. The first of these is the increase in borrowing costs due to the rising risk premium. Furthermore, the public sector's "crowding out" effect, which restricts its ability to attract funds that could be transferred to the private sector, reduces investment over time and limits the country's growth potential. Because it translates into a high budget deficit, this can also lead to higher inflation rates. Consequently, it leads to a deterioration in income distribution in the medium term. There are various ways to reduce the debt burden. First, the debt burden can be reduced by achieving a primary surplus. This process is quite painful because it requires limiting spending.

On the other hand, it is possible to increase taxes and collect them more effectively. I won't delve into the issue of debt monetization, as this method generally results in disaster. Another solution is to accelerate growth through increased productivity. Increases in national income that exceed the rate of debt growth lead to a medium-term decline in the debt stock. Artificial intelligence and digitalization offer significant opportunities for increased productivity in the coming period. If AI can achieve its promised outcomes, the issue of debt sustainability will become less of a priority.