## The Problem with Debt

## Source details

**Canonical URL:** [The Problem with Debt](https://www.imf.org/en/publications/fandd/issues/2018/03/letterfr)

## Other formats

- [Markdown version](/en/publications/fandd/issues/2018/03/letterfr/index.md)
- [Structured JSON version](/en/publications/fandd/issues/2018/03/letterfr/index.json)
- [Bundle manifest](/en/publications/fandd/issues/2018/03/letterfr/bundle-manifest.json)

## Bibliographic details
- Authors: CAMILLA LUND ANDERSEN
- Published: March 1, 2018

---

### Framing and core question
- Central question: “How much is too much debt?”
- Core concern: High public and private debt risks choking off growth by crowding out investment in future growth drivers such as education, health, and measures to address low productivity.

### Findings and analysis highlighted in the issue
- Advanced-economy fiscal adjustment:
  - Alberto Alesina, Carlo Favero, and Francesco Giavazzi find that countries take a smaller hit to growth if they cut spending—including for entitlement programs—than if they raise taxes.
  - The authors argue that raising taxes can be self-defeating, potentially leading to even higher debt and lower growth.
- Inequality and social spending:
  - François Bourguignon (World Bank’s former chief economist) reviews how best to address rising inequality and how to assess difficult trade-offs between debt reduction and protecting social spending.
- Low-income and emerging-market challenges:
  - Fanwell Bokosi (African Forum and Network on Debt and Development) notes that expanding the tax base and increasing the efficiency of public spending are key challenges.
  - He emphasizes that today’s debt crises are harder to resolve than previous ones because the debt landscape is more complex.

### Policy implications and recommendations
- Use the current upswing to strengthen public finances:
  - Governments should use the current economic upswing to “put their house in order.”
- Timing and risk:
  - Rising interest rates will soon make it harder to refinance and service debt, increasing urgency for corrective action.
- Trade-offs to consider:
  - Advanced economies face a trade-off between spending cuts and tax increases, with evidence suggesting spending cuts may have smaller adverse effects on growth but raise distributional and political concerns.
  - Low-income and emerging-market economies need to focus on broadening the tax base and improving public spending efficiency.

### Editorial perspective
- With the global economy “humming along,” the editor argues there is a rare opportunity to act before financing conditions tighten.
- The issue frames debt reduction as essential to freeing resources for future growth and to addressing persistent low productivity that holds back wages.

*IMF F&D — The Problem with Debt (March 2018), Editor's Letter*

---

## Content in this bundle

- **مشكلة الديون**
  - [مشكلة الديون (Markdown version)](/-/media/files/publications/fandd/article/2018/march/ar/letter.pdf.md){rel="alternate" type="text/markdown"}
  - [مشكلة الديون (PDF)](/-/media/files/publications/fandd/article/2018/march/ar/letter.pdf){rel="external" type="application/pdf"}
- **Ejercicio de equilibrio ● Finanzas y Desarrollo ● Marzo de 2018**
  - [Ejercicio de equilibrio ● Finanzas y Desarrollo ● Marzo de 2018 (Markdown version)](/-/media/files/publications/fandd/article/2018/march/es/letterfr.pdf.md){rel="alternate" type="text/markdown"}
  - [Ejercicio de equilibrio ● Finanzas y Desarrollo ● Marzo de 2018 (PDF)](/-/media/files/publications/fandd/article/2018/march/es/letterfr.pdf){rel="external" type="application/pdf"}
- **Le problème de la dette**
  - [Le problème de la dette (Markdown version)](/-/media/files/publications/fandd/article/2018/march/fr/letterfr.pdf.md){rel="alternate" type="text/markdown"}
  - [Le problème de la dette (PDF)](/-/media/files/publications/fandd/article/2018/march/fr/letterfr.pdf){rel="external" type="application/pdf"}
- **The Problem with Debt**
  - [The Problem with Debt (Markdown version)](/-/media/files/publications/fandd/article/2018/march/letterfr.pdf.md){rel="alternate" type="text/markdown"}
  - [The Problem with Debt (PDF)](/-/media/files/publications/fandd/article/2018/march/letterfr.pdf){rel="external" type="application/pdf"}
- **От редактора – Финансы и развитие – март 2018 года**
  - [От редактора – Финансы и развитие – март 2018 года (Markdown version)](/-/media/files/publications/fandd/article/2018/march/ru/letterfr.pdf.md){rel="alternate" type="text/markdown"}
  - [От редактора – Финансы и развитие – март 2018 года (PDF)](/-/media/files/publications/fandd/article/2018/march/ru/letterfr.pdf){rel="external" type="application/pdf"}
- **债务问题 - 编者的话 - <金融与发展>, 2018年3月号·第55卷·第1期, 国际货币基金组织季刊**
  - [债务问题 - 编者的话 - <金融与发展>, 2018年3月号·第55卷·第1期, 国际货币基金组织季刊 (Markdown version)](/-/media/files/publications/fandd/article/2018/march/zh/letterfr.pdf.md){rel="alternate" type="text/markdown"}
  - [债务问题 - 编者的话 - <金融与发展>, 2018年3月号·第55卷·第1期, 国际货币基金组织季刊 (PDF)](/-/media/files/publications/fandd/article/2018/march/zh/letterfr.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/fandd/issues/2018/03/letterfr_