If They Can Pay off their Debts, Why Don't They?

[Davidvictorson]

Below is a list of 10 Countries With the Biggest Debt Burdens¹

1. Japan $10.1 trillion
2. Greece $415.35 billion
3. Italy $2.94 trillion
4. United States $36.8 trillion
5. Spain $1.74 trillion
6. France $3.478 trillion
7. Portugal $305.45 billion
8. Canada $2.52 trillion
9. Brazil
10. Belgium $640.3 billion

I am not an economist so my question would be directed to those who understand economics and government administration. If a country is capable of paying off her debts, why don't they? Obviously , these developed countries I believe are capable of offsetting their debts because they even render aids to other developing nations.
Secondly, are there any benefits, economic or otherwise of a country being in debt?
1. https://www.usnews.com/news/best-countries/slideshows/top-10-countries-with-the-heaviest-burden-of-debt?onepage

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[albert0bsd]

well, i am only going to point to the opportunity Cost, Governments and often have competing priorities, such as investing in infrastructure, healthcare, education, and social programs. Paying off debt immediately would require diverting funds from these essential areas.

[DeathAngel]

Countries struggle to pay off their debts due to many reasons. Economic problems such as recessions or high unemployment rates can hinder a countries ability to generate sufficient revenue. Mismanagement of funds, corruption or inefficient tax systems can further exacerbate the problem. External factors such as global economic crises or unfavourable exchange rates can impede a countries debt repayment capacity. Every countries situation is unique& finding sustainable solutions requires a careful examination of their specific circumstances.

[Gozie51]

For the developed countries, I don't think debt or no debt has any negative influence on them since they still maintain good standard of living by all the progressive indicators to show the economy is growing despite the debt. They could offset that but may not have been worried about it as they also have there reserves and their economy thriving well. But I think the reason they may not be eager to repay is when there is no pressure for them to repay so they would prefer to use the money for other needs and if they have not shown sign of bankruptcy.

[bhadz]

If a country is capable of paying off her debts, why don't they?

It's because they can't just pay it in full as there's always a budget allotted for most of the department depending on how the country distributes that. Our country also has a lot of debt but the government does pay it a little by little and what's sad is that it keeps on ballooning. The payment that's being done is just going through the interest and not with the principal amount. Maybe this is the same for the other countries that instead of paying the principal amount and they're capable of it, they're just paying the interest of it.

Obviously , these developed countries I believe are capable of offsetting their debts because they even render aids to other developing nations.

Base from this website, this is what it said about even being capable of paying, they keep on borrowing as well;

Why do rich nations continue to borrow even if they have the money?

An advanced country may obtain debt to give its slowing economy an adrenaline shot. This allows for the continuity of government programs despite the decline in tax revenue due to recession. Another benefit of getting low-interest debt is avoiding raising taxes or enabling tax reductions to sustain the national budget without hurting economic growth.

Secondly, are there any benefits, economic or otherwise of a country being in debt?

Aside from the connections and funding public projects:

Understanding Sovereign Debt

Governments may issue debt to finance essential public investments, to meet the demand from institutional and individual investors for safe assets, or to prolong unsustainable overspending and enable graft.

[bocyaj]

It is the old concept of economic used by the citizen in their  country to scam their government to pay their tax.Let me explain with the citizen model,then you can understand in the way of the government.The citizen will start the company and get the salary from their company and ask their clients to pay their owing in terms of buying their stocks in the stock market.So their won’t be high economic flow in their company,it reduce half of the tax to the company owners.The second way is the company owners will buy all their luxuries thing by loan using their stocks into the bank with low interest.By this they no need to pay tax for the luxury properties.Like this Developed countries get loan by their government bond.

[Alpha Marine]

All things being equal, those debts were taken for an investment. The debts were taken to produce something, so the debt will be paid from that investment over a given period.
Some countries that are badly run take loans for consumption like paying salaries etc. which is bad. Loans are taken for investment, then you pay the loan back from the proceeds of that investment.

Let's use Japan and Greece as a case study.
According to your post, Japan's debt is just over $10 trillion. Japan's annual budget is about $771 billion. So you see the damage that paying off a loan of over $10 trillion will do to that economy?

The same goes for Greece with an annual budget of $111 billion.
They also just can't print money to pay off the loans because you know what happens if they do that.

Have you ever wondered why a big multinational company still has debts and asks for funding from banks and other financial institutions?
It's because it's financially unwise to use all the money you have for an investment.
For example, if a company has 30 million in liquidity, and they want to go into an investment where the capital is worth 10 million, it would be wrong of them to use the money they have for that investment.
There are many different ways to fund that project, one of them is taking a loan despite having enough money to fund the project.

[usekevin]

The loan is based on their repayment capacity,if one person getting loan for 1 million dollars,he had a capacity to multiple their money to 2 million with a short period of time.So the developed countries had huge capacity to repay the loan at any point.So they getting the loan just for the funds rotation.The developed countries also use the loan money to multiple to double or triple money.This will help their country to increase their economic activities.By this techniques most of the developed countries still multiple their earnings.

[Mr.right85]

I so much feel less humiliated as I had to scan the least in search of my nation and it’s a good thing they didn’t make this list.

Let's use Japan and Greece as a case study.
According to your post, Japan's debt is just over $10 trillion. Japan's annual budget is about $771 billion. So you see the damage that paying off a loan of over $10 trillion will do to that economy?

The same goes for Greece with an annual budget of $111 billion.
They also just can't print money to pay off the loans because you know what happens if they do that.

Now would you look at that! It becomes a thing of wonder on how they got to the point they are now, sinking in debts and the worst is, you still find many of these nations borrowing more. Every government regime seems to be doing this and you still find the nation wallowing on poverty.

Another thing you wonder is,
If they aren’t meeting down the payments; just why are they being handed down more loans? Yeah, it’s a business and case of interest where you have these institutions have some control over the prices and supply of some of the rich in natural resources supplies but, these nations has to look towards a more productive aspect especially the developing once.

[Litzki1990]

Below is a list of 10 Countries With the Biggest Debt Burdens¹

1. Japan $10.1 trillion
2. Greece $415.35 billion
3. Italy $2.94 trillion
4. United States $36.8 trillion
5. Spain $1.74 trillion
6. France $3.478 trillion
7. Portugal $305.45 billion
8. Canada $2.52 trillion
9. Brazil
10. Belgium $640.3 billion

I am not an economist so my question would be directed to those who understand economics and government administration. If a country is capable of paying off her debts, why don't they? Obviously , these developed countries I believe are capable of offsetting their debts because they even render aids to other developing nations.
Secondly, are there any benefits, economic or otherwise of a country being in debt?
1. https://www.usnews.com/news/best-countries/slideshows/top-10-countries-with-the-heaviest-burden-of-debt?onepage

Here is the debt amount of each country, you think each country is very strong economically then why are they not paying the debt. If a country thinks that if they pay the amount of financial debt they have, they will face financial crisis again, then those countries refrain from paying the financial debt. But there are some countries in this list who can repay their financial debt if they want but I think financial debt is a cycle of business, no matter how developed a country is there will be lending or borrowing. Some countries may have borrowed for a long time so they are not paying their debts at the moment even if they can afford it.

[lionheart78]

They are paying their annual dues but it is that If I am not mistaken, the World Bank or the financer approves another loan even though the country has an existing loan that balloons their existing debt, making them look like not paying their debt.  These debts are to fuel innovations and development of a country.  I bet the financer won't stand idle if the debtor doesn't pay.  

[panganib999]

In order to pay off a debt, you first must of course, give something in equivalent that would pay off such debt, countries could go for an exchange of resources, countries could mine or yield whatever they can collect from their territory that would be of value and preferably something that the country they would pay off is lacking. In the case of Japan they could literally pay off their debts with their vast amounts of resources, maybe even products that the lending country could rebrand as theirs although that would seriously hurt their economy.

The fact of the matter is that a country couldn't just pay their debts in one go even if they want to, paying off a debt will cause issues to their economy which may lead them to take out an even bigger loan.

[poodle63]

everything is within calculation like these debts, the countries you mentioned that have debts also gives loan to the other country, i'm pretty sure that the money from these debts are being used to finance sectors that could helps them earning more therefore not wasted money then the debts gonna get paid annually by taking advantage of the rise of earning of such countries.
therefore even with such massive debts they are still fine and not gonna get any economic crises that could make them fail to pay off the debts.
this is the thing with government in general, but sometime there might be really corrupt government that takes on loan and don't have any plan to pay off the debt and instead just leave the burden for the next elected president.

[2double0]

There are many areas of interest where a country invests their money, due to which they cannot simply come and say 'take the money and write off our debts'. The government of such countries may keep these debts as safety parachute once their economy falls to a new low and their GDP growth ratio gets destabilized. Some countries don't repay their debts because they get comparatively cheap interest rates to be paid, and these countries keep delaying their repayments to use the debt in various schemes through which they manage to gain more to add to their reserves.

With some benefits that come handy to these countries, it should not be forgotten that these debts can be highly dangerous if recession takes place and that country becomes economically unstable.

[Peanutswar]

I guess I will include here my country and observe the things they made reason why they keep increase the debt. Some of them really need to seek a money into other large country just to make infrastructure to make help to the community it self and growth of the country but again we cannot deny that there's a chance of mishandling of the money like corruption in the government they seek debt, get some portion of it and spread out into other people who handles the project and the outcome project didn't proceed or lack of funds.
If they keep focus to the people sure those people in the government really care with their people and just not only with their money sake. Reason why generation over generation still the country has a large amount of debts.

[CryptoHeadlineNews]

Below is a list of 10 Countries With the Biggest Debt Burdens¹

1. Japan $10.1 trillion
2. Greece $415.35 billion
3. Italy $2.94 trillion
4. United States $36.8 trillion
5. Spain $1.74 trillion
6. France $3.478 trillion
7. Portugal $305.45 billion
8. Canada $2.52 trillion
9. Brazil
10. Belgium $640.3 billion

I am not an economist so my question would be directed to those who understand economics and government administration. If a country is capable of paying off her debts, why don't they? Obviously , these developed countries I believe are capable of offsetting their debts because they even render aid to other developing nations.
Secondly, are there any benefits, economic or otherwise of a country being in debt?
1. https://www.usnews.com/news/best-countries/slideshows/top-10-countries-with-the-heaviest-burden-of-debt?onepage

But another big question is who are these big nations owning such big amounts of money from? Or are we to say those are the money borrowed from the World Bank, which is a fund gathered from all of it's united nations, that is, in other to help balance/fund the global economy and aid the export, import and distribution of basic items in and out of each of these nations, because to me, I'm still surprised knowing the fact that nations such as "United States" and "Japan" still in debt.

[Text]

Yes, they all have large debts, but they also have strong economies and good credit ratings. This means that they can afford to service their debt and continue borrowing to finance essential public services and investments.

There are several reasons why countries might choose not to pay off their debts, even if they are capable of doing so. For instance, debt can be a useful tool for promoting economic growth, paying off debt can be a challenging and painful process, and countries may not be required to pay off their debts immediately.

Furthermore, there are potential benefits to countries being in debt. Debt can help countries finance essential public services, respond to crises, and invest in the future.

[MusaMohamed]

Think of individual financial management, if you have habit of using leverage for your investment, you will not stop it. It is true for company owners so is government.

They need boosters for their economies and nothing are better than leverage, national debt and money printing. It is also supported by political conflicts in those nations but at the end opposite parties in a same nation have to reach to a consensus to lift their national debt ceiling because they don't want to see a national collapse financially and economically.

There are always risks but big and rich nations are like rich countries. They can create wealth which is basement for taking new and more loans, increasing their national debt. Like the USA. that is too big to be failed, at least many people think so. However, let me repeat, there are always big risks and future is unpredictable, nothing lasts forever and something happen since today.

[stompix]

But another big question is who are these big nations owning such big amounts of money from?

To other nations.
Which are indebted to other nations.
Which are indebted to the first nations.

Here is how the European crisis that was supposed to destroy Europe back in 2013  looked really like when Italy, Spain, Portugal and Greece were all going to go bankrupt. Funny though, no such happened!



You can have one quadrillion in debt, if the others also owe you one quadrillion it means you have a zero balance, but still your debt is one quadrillion. But god forbid doomsayers look at this detail!

[Darker45]

The countries are capable of paying off their debts and they're paying for them, albeit in installment basis. They can't just use their entire budget for debt-paying. That would mean the entire government operation can't anymore function. That would mean the economy would crash. Of what use is being debt-free when you cannot anymore provide for the needs of your schools, hospitals, airports, and other government offices and infrastructures, and the people themselves?

But so much of what's happening in principle. Here's the real thing, government administrations don't care much about debt servicing. It won't make them look handsome to the public. What they need, aside from accumulating so much money while in power, is to look good. They need that especially for the next elections. So they will have to implement all kinds of programs, build projects all over the country, subsidize various public needs, conduct all kinds of public activities, and so on and so forth.

The funds available are, of course, insufficient so they will borrow money. They don't care about it. They don't pay for it, anyway. And they won't be in the position forever. Who cares if the next administration will inherit a larger debt? A senator here once told the public not to worry about debts, adding, "they're just debts."