Should governments in emerging economies worry about their debt?

FINANCE MINISTERSSPIMFGDP of yesteryear would have been shocked by the amount of borrowing their successors must now contemplate. But they would have been just as gobsmacked by how cheap that borrowing has turned out to be. In many countries, the interest rate on government debt is expected to remain below the nominal growth rate of the economy for the foreseeable future. In other words, the “growth-corrected interest rate”, as some economists call it, will be negative. That will be the case in all rich countries in 2023, according to projections published earlier this month by & Global, a rating agency.This scenario has prompted some economists, such as Olivier Blanchard, a former chief economist of the , to rethink the fiscal limits of countries like America, Japan and the euro members. Governments should not “focus on some magic number for the debt-to- ratio”, Mr Blanchard said last month in a lecture hosted by Ashoka University in India. These numbers “have been counterproductive in the past; they would be even more [so] now”.