Comment 03 Nov 16

Macedonia’s Debt is Growing Too Fast for Comfort

It is not the total size of Macedonia’s public debt that is worrying but its pace of growth.

Branimir Jovanovic
Street in Skopje. Photo: Sinisa Jakov Marusic/BIRN

Statistical data released this week revealed that Macedonia's public debt now exceeds 50 per cent of its GDP. What’s so special about the figure of 50 per cent? Nothing really.

The figure has more symbolic meaning than substance. The percentage represents more a sort of psychological red line in the minds of many people than a real indication of high indebtedness.
There is no such thing as a threshold for high indebtedness in economics. The closest thing to one would be the 60-per-cent level set by the Maastricht criteria for euro convergence, but even that does not mean much nowadays.

Nowadays, almost no developed economy in Europe or the world has public debt below 60 per cent. Japan, for example, has had a public debt of about 200 per cent of its GDP for a decade, but the country does not appear to be suffering much.

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