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Debt, Deficits and the Delusion of Comfort

Why Governments Are Running on Empty?


If your household spent more than it earned, year after year, eventually something would break. Yet governments around the world do just that – piling up deficits like it's a strategy, not a warning sign. And for many, this is fine. Better to be in deficit, they say, than be uncomfortable. But what if this comfort is a mirage, and the stress you face at work, the taxes you pay, the cost of living and cost of property are due to this.


Debt, Deficits and the Delusion of Comfort

The Big Numbers: $100 Trillion and Climbing


Global public debt has now surpassed $100 trillion, nearing 93% of world GDP (International Monetary Fund [IMF], 2024). Government deficits – the annual gap between spending and tax revenue – remain elevated at 5.5% of global GDP (IMF, 2024). This isn’t a blip. It’s a habit.

Some of the biggest players are also the biggest spenders:

  • US: $36 trillion in debt (~120% of GDP)

  • Japan: Highest debt-to-GDP in the world at 260%

  • Greece, Italy, France: All above or near 100%

  • Romania and France had some of the highest EU deficits in 2023 (>5.8%) (Eurostat, 2024)

This is not an emerging economy issue. It’s a systemic addiction to borrowing.


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Who’s in Trouble?


Let’s not sugar-coat it. Several countries are already cracking:

  • Lebanon: Currency collapsed. Debt may reach 547% of GDP (Reuters, 2024).

  • Sri Lanka: Defaulted. Lacked dollars to import fuel or medicine (Reuters, 2024).

  • Ghana, Zambia, Pakistan: All went to the IMF – a lifeline with strings (IOB, 2024).

  • Tunisia, Kenya, Egypt: Strained, squeezed, or slipping.


And the price? Economic sovereignty. When countries beg for rescue, they often lose control. Austerity, foreign policy influence, and creditor-first economics become the new normal. In Greece, over 90% of bailout funds went to banks and bondholders (Debt Justice, 2023).


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Malta: Fiscally Fit or Faking It?


Given that I live in Malta, there is the general feeling that the economy is doing great. Whilst revenues are up, I would not be the first to say that we have a reputation for being a washing machine of finance. The problem is that when government tried to curtail it, the economy started collapsing and they lost votes. Now business seems back to usual.


When we look at our stats, Malta, isn’t immune. Here's the truth:

  • Deficit in 2023: 4.7% of GDP (Eurostat, 2024)

  • Public debt: 47.4% of GDP – low by EU standards (which is a sad statement)

  • EU has placed Malta under excessive deficit monitoring


We’re failing the deficit test, but keeping debt in check – for now. The challenge is clear: rein in spending before interest costs and obligations catch up. We can't afford to sleepwalk into a trap. Also without a strong innovation base, it is difficult for Malta to diversify.


Is This Sustainable? History Is Our Teacher


Short answer: No.


The IMF warns that without serious course correction, global debt will surpass 100% of GDP by 2030, and many economies will struggle to borrow affordably (IMF, 2024). Interest payments are ballooning. The US will spend $892 billion on interest alone in 2024 (Congressional Budget Office [CBO], 2024).


Sustainability isn’t just about numbers. It’s about resilience. And right now, many countries are eroding their ability to respond to future crises because they’re already broke. Debt doesn't just disappear. It explodes or it devours.

  • Defaults: 10 countries have defaulted in the past 3 years (IOB, 2024).

  • Austerity: Greece’s economy shrank 25% during its debt crisis (Debt Justice, 2023).

  • Inflation: Printing money to cover debt has led to economic collapse in Zimbabwe, Venezuela, and Lebanon.

  • Stagnation: Japan’s 30-year economic sluggishness is the cost of persistent debt and low growth (IMF, 2024).


The Emotional Cost: Comfort Now, Collapse Later


When governments avoid discipline, markets eventually enforce it. The choice isn’t whether to adjust, but whether we do it by design or by disaster. If economies keep tensing up, war becomes inevitable as countries cannot pay debt so they resort to extreme ways. At the moment it is like an elephant walking across a rope bridge. It creaks, it sways. Every step is heavier. At some point, either the rope snaps or the elephant must stop.


Right now, many governments – and their citizens – are choosing the illusion of comfort over the courage to recalibrate. That’s not fiscal prudence. It’s denial with a price tag. The sad part is that people prefer feel that this is a worthy sacrifice but they are not realising that they are becoming slaves to their own desires, and in turn, to a collapsing economy.


What Can We Do?


You might say that you are a businessman, manager or employee, why should I care or what can I do about it? A lot. Economies are not out there, it is what we choose every day. If you would like to support yourself, not to change the economy but to create a securer future::

  • Avoid short-termism. Don’t buy loyalty with overspending.

  • Don't jump on bandwagons: what people say is the next big thing is usually a marketing scam to get you to lose money.

  • Focus on what matters. Real leaders say "no" when it's needed. Let us be honest, most of the stuff we buy, we don't need.

  • Prepare for external shocks. Financial fragility is a cultural vulnerability. Don't hope the world is safe. Hope you know how to feel and create safety for yourself.

  • Develop resilience. Do not hate hardship but see it as how you gain muscle. The gym is not fun but we grow in it. Some learn to enjoy it.


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