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In 2019, the United States only made loans worth USD 1.2 trillion (Rp. 18,156 trillion). However, the United States must now borrow $ 3 billion to pour financial and health assistance against Covid-19. Currently, the total state debt of the United States reaches USD25 trillion.
The value of the loan is beyond calculation, which also shows the magnitude of the Covid-19 impact. The next budget allocation is estimated to reach about 14% of the total United States economy. The United States government has also extended the tax payment deadline to April 15.
The United States government is still holding in-depth discussions regarding additional assistance. Some Republican figures seem concerned about the impact of the program, given the country’s ever-increasing debt burden. The United States is making loans by selling government bonds. Interest is relatively low because the risk is also low.
It wasn’t just the Covid-19 outbreak that caused American debt to accumulate. Before the deadly virus attacks, Uncle Sam’s country also has huge debt that continues to accumulate every year. Experts assess that the financial situation of the United States is not healthy in the long term because spending is higher than income.
The US Congressional Budget Office. USA It predicts that the US budget deficit. USA It will hit $ 3.7 trillion this year, while the country’s debt rises 100% above gross domestic product (GDP).
Last week, the head of the US Central Bank. Jerome Powell said he wanted to see better US financial books. USA However, he also did not deny that the financial assistance provided was an important step to save the company from bankruptcy and the phenomenon of mass layoffs.
“The secure American economy needs help from all of us,” Powell was quoted by the BBC as saying. As part of government assistance efforts, the Federal Reserve has raised more than $ 1 trillion this week.
The United States government also borrows a lot of money from other countries or foreign investors. That has been a long time ago. Some of the foreign investors that loaned the most money to the United States through February were Japan, China, and Britain.
The tensions that have increased between the United States and China have also briefly touched on debt. As reported by the Washington Post, the United States government had a discussion to cancel debt bonds with China. President Donald Trump does not seem to want to kneel before China.
Princeton University economist Alan Blinder predicts that US loans to China will likely increase this year. “So far everything is fine considering that the United States government can make loans as usual,” Blinder said.
In a Pew Research analysis, the crown pandemic could trigger an increase in debt for countries around the world. “The global economy has declined by 3%, governments in the United States (also) Europe will spend billions of dollars in emergency funds in the face of a pandemic,” said John Gramlich, a researcher at Pew Research.
Japan is also a great economic country where the government is increasing debt. In fact, Prime Minister Shinzo Abe has already discussed the tax increase in 2019 to reduce the debt position. “Abe also cannot raise taxes again if the economy is seriously affected,” Gramlich said.
Not only rich countries need debt. The United Nations (UN) is also concerned that many countries are experiencing increased debt. At the same time, the poor country also wants a cancellation and to postpone debt payments.
Therefore, UN Secretary General Antonio Guterres called on the International Monetary Fund (IMF) and the World Bank to act quickly to help countries in need of debt. He revealed that the two institutions must also work very hard. “We know that the virus spreads like a forest fire. There is no barrier,” said Guterres. Debt is a solution so that poor countries do not suffer anymore because their people are impoverishing.
Nearly 140 advocacy groups and charities have asked the IMF and World Bank, the G-20 government, and private creditors to help poor countries during the coronavirus crisis. They asked to cancel the debt payments of poor countries.
The call was led by Jubilee Debt Campaign, a UK defense agency, before G-20 leaders held a meeting to respond to the global coronavirus crisis for developing countries. They called for the cancellation of the debt payments of 69 poor countries so far this year. That includes private creditors who are expected to release $ 25 billion for these countries and could reach $ 50 billion if they extend into 2021.
Applications for debt cancellation or additional financial assistance are also free of prerequisites, such as savings. G-20 member countries are also advised to support emergency rules to prevent poor countries from being sued by private creditors.
“Developing countries are shaken by economic instability and at the same time by the need for a health emergency,” said Jubilee Debt Campaign Director Sarah-Jayne Clifton.
Ghanaian Finance Minister Ken Ofori-Atta expressed a similar sentiment, who requested the Development Committee for the IMF and the World Bank. He said that China, as Africa’s largest creditor, should refrain from collecting debt payments.
Most governments and institutions have requested similar steps in the form of debt relief or debt service programming. The IMF has provided USD50 billion for emergency fund payments, and more than 90 countries have requested IMF assistance. They also changed the Disaster Relief and Containment Trust (CCRT) to make it easier for poor countries to get aid and debt services from the IMF even though they did not have a case of a crown outbreak.
Both the IMF and the World Bank have also emphasized cooperation with bilateral creditors to allow low-income countries to postpone debt payments for 14 months from the beginning of May.
China, as a large creditor, is considering the proposal. Beijing said it was ready to cooperate based on military cooperation with poor countries. “Perhaps the delay in paying the debt is agreed,” a Chinese official told Reuters.
Experts say that a moratorium or comprehensive debt assistance for developing countries would be difficult without the help of China, which has an important role. However, Chinese officials are frugal about their attitude. “The UN needs to have a systematic process to restructure the debt of poor countries,” said Oxfam and Save the Children. (Muh Shamil)
(ysw)
