At What Point Does National Debt Become Unsustainable?

When does national debt become unsustainable? There are several ways to measure this. One is the share of revenue used for interest and principal payments. Another is the ratio of debt to sovereign wealth or national investments. I do not think national debt should exceed 10% of a sovereign fund’s value. Norway’s fund dwarfs its debt by more than ten times. The US currently spends under 20% of revenue on debt interest. The UK spends under 15% and South Africa about 15%. President Tinubu said Nigeria will allocate $11 billion to debt servicing in 2026. That may be small compared to growing revenue but still a major part of the budget. Governments can borrow to grow their wealth funds but should aim for funds far larger than debt.

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