When Global Debt Surpasses the Limits of Reason

According to the most recent report published by the Institute of International Finance, global debt has surpassed $324 trillion, amounting to more than three times the total annual gross domestic product of the world.

Such a great figure not only reflects the inability of governments to effectively manage their economies, but also reveals more profound structural imbalances in the economic and political relationships between nations.

The origins of the crisis can be traced back to the mortgage crisis—the financial crisis of 2008—when leading nations turned to extensive borrowing to stave off economic collapse. This was later compounded by the COVID-19 pandemic, which normalized unchecked monetary expansion and the broadening of support programs in the absence of long-term strategies. The subsequent outbreak of war in Ukraine further intensified global economic pressures, driving governments to increase spending on defense and energy. Consequently, debt evolved from a short-term solution into a persistent and entrenched practice.

The issue lies not only in the magnitude of the debt, but more critically in the manner in which it is employed. When public funds are directed toward temporarily managing crises rather than investing in productive ventures, debt ceases to be a means of recovery and it becomes a mechanism for sustaining failure. Consequently, nations that lack robust production capabilities grow more reliant on global markets, less able to protect their sovereignty, and increasingly susceptible to external economic shocks.

Amid the global race toward increased indebtedness, the Arab world offers a striking panorama of disparity: on one side, nations such as the United Arab Emirates and Saudi Arabia have channeled their surpluses into building diversified and resilient economies; on the other, some countries remain trapped in cycles of borrowing, with funds directed toward everyday consumption rather than long-term development—yielding neither sustainable growth nor food and social security. These are the nations that continue to meet their debt obligations, yet fall short of investing in the path toward economic independence.

However, the fundamental question remains unanswered in the region: What are we doing with this debt? Are we using it to build bridges to the future, or simply to address the immediate challenges of the present? Is debt serving as an economic catalyst, or has it become a burdensome weight dragging us downward? What is the true value of growth if it is neither inclusive, productive, nor sustainable? And what occurs when markets lose faith and begin to price in risk instead of hope?

The opportunity remains, but it will not last forever. Three decisive steps are necessary: first, creating an economy that generates its own revenue, rather than depending on Western bonds; second, forming regional partnerships that dispel the illusion of individual survival; and finally, establishing institutions that comprehend the significance of transparency and the importance of efficiency. Governance is not simply a technocratic catchphrase, but a safeguard for survival in an era that is unforgiving to those who fail to prioritize spending effectively.

Escaping this cycle demands clear vision and institutions that possess both competence and transparency. The future is not shaped by debt alone, but by true production. Debt is not an unavoidable burden; it becomes so when we overlook the fact that nations are built through production, not through inflated figures, and through determination, not through reliance on the empty promises of donor rhetoric.

Talal Abu-Ghazaleh