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Rising Debt Burdens

Bob Doll & Timothy Wong

The Burgeoning Debt Crisis

Global debt as a percentage of global GDP has moved up from roughly 100 percent in 1970 to well over 250 percent today. And the rate of increase is accelerating (see Chart 1). Global government debt rose more than 10 percent in 2022 driven primarily by the U.S., Japan and China, but with the vast majority of countries continuing to increase borrowing. Debt service costs increased by more than 15 percent as interest rates rose. The accumulation of public debt since 2007 is largely attributable to the two major economic crises governments have faced—first the global financial crisis, and then the COVID-19 pandemic.

The post-crisis wave of debt buildup has been unprecedented in its size, speed, and reach in emerging markets and developing economies. Similar waves in the past half-century led to widespread financial crises in these economies. Accordingly, policymakers must remain vigilant about the risks posed by record-high debt levels.

In 2020, the world observed the largest one-year debt surge since World War II, with global debt rising to USD 226 trillion as the world was hit by a global health crisis and a deep recession. Debt was already elevated going into the crisis, but now governments must navigate a world of record-high public and private debt levels.

Debt dynamics, however, differ markedly across countries. Advanced economies and China accounted for more than 90 percent of the USD 28 trillion debt surge in 2020. These countries were able to expand public and private debt during the pandemic thanks to low interest rates, the actions of central banks (including large purchases of government debt), and well-developed financial markets. But most developing economies are on the opposite side of the financing divide, facing limited access to funding and often higher borrowing rates.

In 2020, the world observed the largest one-year debt surge since World War II

The shocks experienced in recent years have had a severe impact on low and lower-middle income developing countries. This not only impacts the past but also poses a future threat. The world’s poorest nations, home to a significant portion of the global poor, are at risk of facing a lost decade. This would be a humanitarian disaster and a significant moral failure for the global community, especially developed nations. Urgent action is needed, starting with addressing the looming debt crisis.

According to the IMF, approximately 15 percent of low-income countries are already in debt distress, and an additional 45 percent are at high risk of experiencing the same. Among emerging markets, about 25 percent are also facing high risk and borrowing conditions resembling defaults. Countries like Sri Lanka, Ghana, and Zambia have already defaulted, and many more are likely to follow suit.

Unfortunately, leading economies such as the U.S. have their own debt problems to grapple with. Federal expenditures grew 35 percent in 2022 and are projected to grow by another 35 percent in 2023. Relative to the size of the U.S. economy, interest costs in 2030 will reach 3.3 percent of gross domestic product (GDP), exceeding the previous post-World War II high of 3.2 percent of GDP, which was recorded in 1991. Within 10 years, net interest costs will exceed federal spending on crucial programs like Medicaid and defense (see Chart 2).Spending for net interest will become the largest ‘program’ in the U.S. federal budget within the next 30 years, outpacing spending on Medicare and Social Security. Within ten years, the U.S. federal government will spend more on interest costs than it has historically spent on research and development (R&D), infrastructure, and education combined. Rising interest payments can crowd out other priorities in the federal budget and lead to a cycle of higher deficits, growing debt, and even more interest payments in the future.

The U.S. national debt is higher as a share of Gross Domestic Product (GDP) than at any time since World War II and is on course to breach that record. This does not mean there is no proper time to borrow. In fact, deficit spending helped to prevent an economic catastrophe and support the country through a pandemic in the recent COVID-19 crisis. However, even this justified borrowing comes with some consequence, and much of the recent borrowing before and since the COVID crisis was enacted for political rather than purely economic justification.

In the developed world especially, deficits are caused mainly by predictable structural factors: an aging baby-boom generation, rising healthcare costs, and a tax system that does not bring in enough money to pay for what the government has promised its citizens.

Consequences of Debt Burden on Governments

What are the main consequences of the growing debt burden?

  • Decreased savings and income
  • Higher interest costs
  • Lack of flexibility
  • Risks of a new crisis

High debt levels:

  • Threaten economic vitality
  • Place a strain on the budget
  • Create geopolitical challenges and risks
  • Make responding to new emergencies more challenging
  • Are unfair to younger and future generations.

The interest on debt immediately reduces the money available for other spending programs. Advocates of certain benefits will call for a reduction in spending in other areas as it increases.A growing debt burden becomes a big problem for everyone in the long term.

If long-term fiscal challenges remain unaddressed, the economic environment weakens as confidence suffers, access to capital is reduced, interest costs crowd out key investments in our future, the conditions for growth deteriorate, and nations are put at greater risk of economic crisis. If long-term fiscal imbalances are not addressed, the future economy will be diminished, with fewer economic opportunities for individuals and families and less fiscal flexibility to respond to future crises. As federal debt mounts, governments will spend more of their budget on interest costs, increasingly crowding out public investments. As more federal resources are diverted to interest payments, there will be less available to invest in areas that are important for economic growth.

‘Intergenerational justice demands that one generation must not benefit or suffer unfairly at the cost of another.’

The fundamental problem with government debt is that it requires future taxes that slow economic growth and reduce potential welfare. Calls for intergenerational justice capture this concept, but only imperfectly, as they do not specify the nature of what is just or lay bare the essential tax issues. While some policy analysts characterize the public financing choice as between taxes and debt, the reality is that the choice is between taxes today and taxes tomorrow—and taxation has efficiency costs that are detrimental in all but the most extreme cases.

Governments borrowing money means that more treasury securities are issued and compete against securities issued by the private sector. The government’s need to borrow will eventually exceed the savings available, and even though more households and businesses are purchasing treasury securities, national savings will reach a low point in comparison to the size of the federal debt. Treasury securities with high interest rates will make saving more appealing than investing for businesses. The private sector will stop seeking investments that can generate growth due to the incentive to save. This includes the lower amount of capital available once individuals stop investing in securities offered by businesses due to treasury securities being more attractive. This lack of investment will result in low productivity and create an environment where work produces little value and wages decrease.

Federal borrowing competes for funds in a nation’s capital markets, thereby raising interest rates and crowding out new investment in business equipment and structures. Entrepreneurs face a higher cost of capital, potentially stifling innovation and slowing the advancement of new breakthroughs that could improve lives. Growing debt also has a direct effect on the economic opportunities available. If high levels of debt crowd out private investments in capital goods, workers would have less to use in their jobs, which would translate to lower productivity and, therefore, lower wages. Higher interest rates resulting from increased federal borrowing would make it harder for families to buy homes, finance car payments, pay for college or even put food on the table. Fewer education and training opportunities stemming from lower investment could leave workers without the skills to keep up with demands of a more technology-based, global economy.

Christian voices in the public square generally warn against the potential damages from too much debt, saying things like, ‘Intergenerational justice demands that one generation must not benefit or suffer unfairly at the cost of another.’ There is also a strong plea to avoid reductions in government programs that benefit the poor.

Consequences of Debt Burden on the Church

In the U.S. and many other (especially developed) parts of the world, giving to churches has fallen, often significantly. The generation that was most generous is passing away. This generation gives as much as half for typical evangelical ministries—locally, nationally, and globally. In his book, The Great Evangelical Recession by John S. Dickerson, the author argues, ‘From young, thriving and conservative ministries to established evangelical mainstays of all stripes, the financial strain of the Great Evangelical Recession is beginning to show in desperate funding pleas from all manners of ministries.’1 While there are many causes, debt and its consequences is certainly one of them.

Some Christian commentators maintain that indebtedness is viewed as a judgement of God on rebellious nations (eg, Deuteronomy 15:6-7 and Deuteronomy 28: 43-44). Jesus says, in the parable of talents in Matthew 25:29, ‘For to everyone who has will more be given, and he will have abundance. But from the one who has not, even what he has will be taken away.’ The point of the parable, reflecting a truth regarding the kingdom of God, is summarized in verse 29 (as well as in Matthew 13:12) and indicates that those who have productive assets and use them wisely will be given more while those that do use productive assets wisely will have their assets confiscated. Ultimately, the parable is not about asset returns and the distribution of wealth in a capitalist system. Rather, the spiritual truth communicated is that the kingdom of God will be given to those with spiritual insight, and who understand the intention of the master, while those who do not understand the master’s intention will not be allowed to participate in the kingdom. The point is not about debt, assets, and their use, but rather about understanding the master and obeying his wishes. Nevertheless, the parable explicitly uses the concept of debt to make this spiritual point. In the process, we are led to understand that wise use of debt for productive purposes and its repayment can be likened to God’s intentions with regard to his kingdom.

Addressing Debt Burden

We need to understand these issues if we are to seek the ‘welfare of the city’ (Jeremiah 29:7). The consequences and timeline for excessive government debt include: more debt issuance, higher inflation, financial repression, increased taxes, and spending restraint (reduced benefits).

The only way to lower deficits is to implement higher rates and reduce federal spending. This situation will result in a lower disposable income, whether high tax rates reduce paychecks and the incentive to work, or whether a future administration cuts expenses by reducing social programs or other ‘entitlement’ benefits.

Monetary policy has appropriately shifted focus to rising inflation and inflation expectations. While an increase in inflation, and nominal GDP, helps reduce debt ratios in some cases, this is unlikely to sustain a significant decline in debt. As central banks have raised interest rates to prevent persistently high inflation, borrowing costs rise. In many emerging markets, policy rates have already increased and further rises are expected. A significant tightening of financial conditions is heightening the pressure on the most highly indebted governments, households, and firms. If the public and private sectors are forced to deleverage simultaneously, growth prospects will suffer. The uncertain outlook and heightened vulnerabilities make it critical to achieve the right balance between policy flexibility, nimble adjustment to changing circumstances, and commitment to credible and sustainable medium-term fiscal plans. Such a strategy would both reduce debt vulnerabilities and facilitate the work of central banks to contain inflation.

Robust macroeconomic, financial and structural policies can help countries strike the right balance between the costs and benefits of debt accumulation. Such policies are also critical to help reduce the likelihood of financial crises and alleviate their impact, if they erupt. Although many emerging markets and developing economies have better policy frameworks now than during previous debt waves, there remains significant room for improvement.

The war in Ukraine is adding risks to unprecedented levels of public borrowing while the pandemic is still straining many government budgets. The situation highlights the urgent need for authorities to undertake reforms, including governance reforms, to improve debt transparency and strengthen debt management policies and frameworks to reduce risks.

Becoming Informed

Many educators have been advocates for increasing the awareness about the issues of debt and consumption. This approach to learning is slowly having an impact as the concept of voluntary simplicity has become an integral part of many people’s philosophies of living. The idea that consumerism makes life easier is increasingly challenged when individuals learn the impact that debt accumulation can have on their welfare.

Christian voices on the public policy issue of government debt must be better informed on the basic economics of debt and its consequences.

Christian voices on the public policy issue of government debt must be better informed on the basic economics of debt and its consequences. That requires a foundational understanding of how Scripture views debt. Scripture figures debt as sin, which implies that debt avoidance is important. Debt acquisition is not neutral. It is not merely a practical tool of economic policy that can be rationally used whenever advantageous. Debt brings economic consequences that must be dealt with, and hence debt avoidance is advisable. Scripture also figures the reality that debt must be repaid. That repayment is not likely to be neutral in its economic effect. Long-run productivity and economic growth are affected by intergenerational redistribution.

Given that Scripture figures in multiple ways the detrimental effects of debt accumulation, then debt reduction deserves more careful attention by Christian commentators. The current fiscal situation in many advanced economies is not sustainable with long-term debt to GDP ratio forecasts rising to historic levels. Structural deficits must be reduced, requiring primary surpluses on balance over time.

Impact of Debt

Money is something we deal with every day. We are either working to earn money, spending money, planning how to spend money, or using something on which we have spent money. The way we spend our money is an expression of our faith. We spend our money, time and thoughts on the things which are most important to us. However, many churches do not talk about personal finances unless there is a need for increased giving. Yet, the spiritual impact is clear:

  • Financial challenges can ruin marriages.
  • Vocational choices can too often be about money.
  • Consumerism can be an addiction.
  • People feel like they cannot be generous givers because their debt is overwhelming.
  • Overwhelming debt can make people feel isolated, embarrassed and alone. Debt can make people feel depressed and powerless.

Christians often talk about the physical and the spiritual as if they are two separate entities—but they are connected. Being worn down physically has an adverse spiritual effect.When we are weakened by lack of sleep, illness, or hunger, it affects our spiritual outlook and ability to make wise decisions. In the same way, we cannot compartmentalize our financial management from our spiritual life. Not only can we get a clear picture of our spiritual priorities from our financial habits, but the decisions we make with our resources also impact our own spiritual sensitivity. As our debt grows, it impacts our ability to hear and respond to God in these four ways:

  1. Debt makes us feel poorer than we are

Pastor Mark Batterson said, ‘When God blesses you financially, don’t raise your standard of living. Raise your standard of giving.’ That is difficult when you live in a culture that is always encouraging you to live beyond your means. You do not want to end up in a position where your financial perspective and God’s are entirely at odds. He may have blessed you with an income that allows you to bless others, and there is a problem if you leverage that income in a way that makes you feel impoverished.

  1. Debt discourages generosity 

The natural consequence of always feeling financially strapped is that we do not have the breathing room necessary to be generous. Instead of feeling the joy of giving sacrificially, we find ourselves in a position of giving out of obligation and insufficiency. Outstanding debt infringes upon our ability to give freely and openly.

  1. Debt affects our view of God’s provision 

In the Lord’s Prayer, Jesus encourages us to pray for our daily bread (Matthew 6:11; Luke 11:3). In the same way that God daily distributed manna in the wilderness (Exodus 16:1-36), Jesus encourages us to look for his daily provision in our lives. After all, God does not always provide everything in advance. What happens if you already owe tomorrow’s allotment of bread to someone else? Suddenly God’s provision seems inadequate. We find ourselves having to ask God for twice as much bread tomorrow because of the decision we made yesterday. If God does not provide, it feels like he has let us down.

  1. Debt can make obedience difficult 

Every Christian wants to be able to respond to promptings and conviction. If moved by a global, national or local tragedy, Christians want to give when they feel led. Debt can create dissonance. It is another factor that needs to be taken into account when you feel led to meet someone else’s need. Imagine feeling a very distinct call to the mission field or to join a ministry where you need to raise your own support. No matter how badly you want to be obedient, you are still responsible to the credit card company, retail establishment, or bank that you owe money to. Too much debt can become a chain that holds you in place and an impediment to following God’s call. You want to avoid using credit cards for things that lose their value once you own them, or at least pay your credit cards off monthly so that they do not accrue into a mountain of debt that limits your freedom and negatively impacts how you perceive your worth.

Freedom from Debt

How you spend your money is an indication of how you integrate your faith into every aspect of your life. Getting out of debt means intentionally deciding not to define yourself based on what you own. That’s not to say that spending is inherently wrong, or that treating yourself to some nice things is bad. But how much you buy depends on how much you can afford, and that is a reflection of your values. It is amazing how content we can be living a very simple life if we would only make the effort to do it.

Getting out of debt means intentionally deciding not to define yourself based on what you own.

People who have fought their way out of debt say not owing money gives them a sense of joy, freedom and gratitude to God. They live out their understanding that everything they have is a gift from God. With that understanding comes thankfulness and peace, along with a sense that God will provide for them in good times and bad. Everything that we have, including our money and possessions ultimately comes from God, not our own efforts. When you realize this, it suddenly becomes a lot easier to escape from the grasp of consumerism and quit trying to fill the void by accumulating more stuff.

Financial freedom will also result in the ability to contribute financially to the work of God’s kingdom. The global body of Christ can play a significant role in offering a solution by simply exercising better stewardship of financial resources. The Centre for the Study of Global Christianity at the Gordon-Conwell Theological Seminary estimates that the total personal income of Christians globally is USD 53 trillion as of mid-2022. Giving to Christian causes is USD 896 billion or 1.7 percent of total income. This is well below the 10 percent tithe suggested in scripture. Of this amount, only USD 52 billion is given to global foreign missions. There is a great need for greater financial resources to be released to complete the Great Commission.

Potential Future Implications

From a financial standpoint, the world in which we live may be unsustainable, and current financial systems may not stand. Several key implications for the Great Commission follow:

Reliance on Volunteers and Discipleship

With less economic growth and higher taxes due to the debt crisis, the church (and related ministries) will need to rely less on paid professionals and more on trained volunteers. The key is faithful men and women who have found life in Christ. Could it be that the solution is disciples, not dollars? We need to awaken and nurture spiritual gifting in non-staff servant leaders as we seek to accomplish the ‘good works’ God has prepared in advance for us to do (Ephesians 2:10). Some financial problems are not a shortage of funds, but a shortage of commitment.

Fresh Inroads

Emerging countries are struggling with the impact of the debt crisis and the resulting greater hardships for their citizens. For example, the 10/40 Window refers to a geographical region between 10 degrees and 40 degrees north latitude, spanning across Africa, the Middle East, and Asia. This region is characterized by significant challenges, including poverty, political instability, and limited access to basic services. The debt crisis in the 10/40 Window has emerged as a critical issue with severe implications for these countries. The 10/40 nations also have a high concentration of unreached people groups, and collectively represent the final frontier for world missions.

The debt crisis in the 10/40 Window has serious consequences for the citizens living in these countries. It can lead to reduced social spending, inadequate healthcare systems, compromised education, and diminished infrastructure development. Moreover, the debt burden hampers the ability of these nations to respond to other pressing challenges, such as climate change, conflict resolution, and poverty eradication.

Can the global body of Christ rise up in a coordinated manner to offer sustainable solutions funded by the generous giving of the saints in the developed world? Generous missions giving and strategic mobilization of kingdom resources could generate fresh inroads for the gospel in some of the poorest and least reached nations of the world.

Call to Steward Resources

As the church becomes obedient in stewarding its resources, God will pour out greater blessing upon her, resulting in a virtuous cycle of provision and blessing flowing to the nations. As God says in Malachi 3:10, ‘“Bring all the tithes into the storehouse so there will be enough food in my temple. If you do,” says the Lord of Heaven’s Armies, “I will open the windows of heaven for you. I will pour out a blessing so great you won’t have enough room to take it in! Try it! Put me to the test!”.’ May it be so!


  • Risks and Threats from Deficits and Debt, Committee for a Responsible Federal Budget
  • https://www.crfb.org/papers/risks-and-threats-deficits-and-debt
  • Global Waves of Debt – Causes and Consequences, World Bank Group https://thedocs.worldbank.org/en/doc/279031577823091771-0050022019/original/GlobalWavesofDebtfullreport.pdf
  • The Global Outlook for Government Debt Over the Next 25 Years: Implications for the Economy and Public Policy, Peterson Institute for International Economics https://www.piie.com/bookstore/global-outlook-government-debt-over-next-25-years-implications-economy-and-public-policy


  1. John S. Dickerson, The Great Evangelical Recession: 6 Factors That Will Crash the American Church…and How to Prepare. (Grand Rapids: Baker Books, 2013).

Authors' Bios

Bob Doll

Bob Doll is Chief Investment Officer at Crossmark Global Investments. Prior to joining Crossmark in 2021, Bob held similar roles at other large asset management firms, including serving as Senior Portfolio Manager and Chief Equity Strategist at Nuveen and Blackrock, President and Chief Investment Officer at Merrill Lynch Investment Managers, and Chief Investment Officer at Oppenheimer Funds, Inc. Bob serves on a number of boards including the Alliance of Confessing Evangelicals, Cairn University, Christianity Today, Gordon Conwell Theological Seminary, Kingdom Advisors, The Lausanne Movement, Movement.org, New Canaan Society, and Word of Life Fellowship.

Timothy Wong

Timothy Wong is Managing Director and Regional Head for DBS Group Research. Based in Singapore, he oversees a 70-strong team of Economists, Strategists and Investment Analysts spread across six offices in Asia. Under his leadership, DBS Vickers research team has picked up numerous awards, making it the top award winning broker in the FT/ Starmine Asian Awards and the Singapore Business Times/Starmine Analyst awards in 2012.