Page 30 - Banking Finance August 2023

ARTICLE

Average Interest Cost (AIC)
It is arrived at by dividing interest payments during a year with average debt. Centre's AIC increased marginally from 6.6
per cent in 2011-12 to 7.1 per cent in 2018-19, while States' AIC declined slightly from 7.2 per cent to 7.0 per cent over
the same period.

What should be Ideal Debt to GDP and should Major Countries public debt as per IMF
the Indian Government go for Debt shopping for
Name of Country Debt to GDP Percentage
dealing with the current Economy scenario:
China 50.64
A study by World Bank reveals that if the Debt/GDP ratio
exceeds 77% for prolonged periods then those countries India 68.05
experience a significant slowdown in economic growth.
Austria 73.75
Every percentage point of debt above this level cost counties United Kingdom 86.77
1.7% in economic growth. In the emerging market, each
Brazil 87.01
additional percentage point of debt above 64% annually slow
Canada 89.94
down growth by 2%.
Egypt 92.65
So we have already crossed the standard tolerance line of
64%. However, if we see the debt position of major Spain 97.09
economies we found following scenario.
France 98.39
Belgium 102.03

United States 106.91
Portugal 120.13
Italy 135.48
Venezuela 182.45
Greece 184.85
Japan 237.13

30 | 2023 | AUGUST | BANKING FINANCE