As a comparision US debt to GDP ratio is 133%
Also forex reserves is 3.4B, I don’t see why it would be impossible to pay $800M
> As a comparision US debt to GDP ratio is 133%
The bigger and wealthier the country is, the more markets are willing to cut them some slack. Japan is at 263%, France 112%, etc etc. It's something of a fraud but that's how it is. Capital markets are often very bigoted, to be charitable.
The remainder is owed to Japanese citizens and corporations. The remainder no doubt held by other central banks.
Meanwhile the prefectures and towns are not allowed to carry net debt. Granted various accounting tricks and lots of weirdness exists. Including a scheme where the federal government skips paying towns their transfer payments and instead tells them to borrow "on the federal government's behalf". This "favour debt" is then not reported as proper debt as the federal government has promised to pay the missing transfer payments, sometime, in the future.
Then its meaningless. It should just be subtracted form total debt.
In the US, agencies can end up with surplus cash (either taxes were higher than needed, or budgets were off, etc). Agencies will buy T bonds with this excess cash to transfer it back to the Treasuries general fund, so it can be reallocated. The T bonds that the agency now holds are far from "meaningless".
From a thousand foot view, the government is one homogenous entity. But that perspective breaks down pretty quickly in the real world. It's pretty easy to find Intragovernmental debt stats and subtract that from the total, if you are so inclined.
Usually, people are concern with the total liability of a government. You can't dismiss intragovernmental debt in this calculation.
The case you mention is basically an ability for different departments to earn some interest on unspent budgets and that's fine. Its basically some bureaucracy level budget adjustment mechanism.
However on a state budget and state central bank level the interest paying part of the Bond is not relevant.
And when comparing how large governments debt% is, to have a useful metric for practical purposes those bonds should be removed.
The only “out” is a miraculous increase in future productivity or an increasing percentage of working age adults that increase GDP to make it sustainable. Of course in the long run we are all dead.
It's, obviously, not the same, a debt in your own currency that in a currency that you don't control.
A country that is taking debt in a currency that they don't control is, almost always, searching for trouble.
Every country is different. But would we, in the particular case of El Salvador, be better if we operated in another currency?
- The USD is the currency of our main trade partner and the currency of the 30% of Salvadorans that live in the US. Our remittances don't incurre in expensive foreign exchange.
- Less Foreign Exchange risk, compared to what Colombians, Chileans, Argentina or Mexicans experience.
- We also have lower interest rates than many bigger Latin American economies.
- Most Latin American currencies have been devalued in the past years. With few exceptions like the Guatemalan Quetzal. I've heard about the Cuban Peso Convertible and the Panama Balboa too but those are pegged to the dollar anyways. Or French Guyana and some Caribbean islands which use the Euro perhaps.
There are significant differences between the US and El Salvador that raw debt to GDP does not capture.
Foreign-denominated debt is a huge trap for developing countries. Some more conspiratorial folk would say that’s intentional (to take their natural resources by making them indebted, buying their resource exports and then they have to pay much of that revenue back to you as interest).