Navigating the Depths of Debt

 In recent months, my contemplation of the concept of debt has led me to a deeper understanding, prompting me to explore and share my thoughts on this intricate subject. Interestingly, this exploration was spurred by passionate debates with friends who argued that no significant entity, be it a great company or government, operates without incurring debt.

This opposition propelled me to reassess my stance, prompting a more in-depth dive into the dynamics of government debt and its impact on national health. Notably, heavily indebted countries like the USA and UK continue to function, inheriting more debt while undertaking substantial projects. However, my research revealed that sustained debt at the corporate level, especially over extended periods, is harder to find.

"Constructive" debt typically arises from situations where expenditure exceeds revenue, often growing due to infrastructure expansion for governments. Governments, in particular, tend to readily turn to debt, being immediate beneficiaries rather than payers. In contrast, companies take on more calculated debt since they are both beneficiaries and payers. This dynamic contributes to governments easily incurring debt compared to companies.

Global public debt has seen a significant increase, surpassing fourfold from USD 22 trillion in 2000 to USD 92 trillion in 2022, outpacing global GDP. Unfortunately, this surge has led to 59 countries facing high levels of debt in 2022, up from 22 in 2011, according to the United Nations Conference on Trade and Development.

The historical context of public borrowing dates back two thousand years, with Greek city-states like Syracuse borrowing from their citizens. Today, however, there's a prevailing belief that development cannot occur without debt, leading to a concerning normalization of this financial tool.

Sadly, debt is an addiction that can entrap both individuals and governments, creating repetitive cycles of indebtedness. Developing countries, including Uganda, pay higher interest rates, facing exchange rate fluctuations and borrowing at rates four times higher than the United States and eight times higher than Germany.

Excessive debt levels may make governments vulnerable to a debt crisis, risking the inability to make payments and further borrowing. Uganda's familiarity with debt nearly placed it in dire straits, necessitating budget revisions to clear bad debts and allocating over 40% to debt servicing in recent budgets. Historically, governments defaulting on their debts have been witnessed, from Spain in the 16th century to revolutionary Russia after 1917. Sovereign default, the failure of a national government to repay its debts, carries severe consequences, limiting future access to debt markets and increasing the cost of any loans obtained.

On the corporate side, my exploration led me to the Bible for insights. While the commandments don't explicitly forbid operating in debt, biblical passages like Proverbs 22:7 caution about the consequences, emphasizing that the borrower becomes the slave of the lender. The biblical narrative in 2 Kings chapter 4 also illustrates the impact of a good man's death leaving a family in financial debt.

In conclusion, it's imperative to address the growing pattern of debt at both macro and micro levels. I personally commit to this journey, working towards liberating myself and my family from debt. The call to action echoes the sentiment that we must collectively strive to break free from the chains of debt, seeking financial freedom and stability. So help me God.