Private and public debt levels are high and possibly unsustainable.

Many African countries have used the past decade to put in place sound and sustainable economic policies that have delivered robust growth and low inflation. Together with debt relief, these policies have resulted in low levels of public debt, relatively sound financial systems, and most important rising living standards.

The country is also burdened with high levels of debt and limited resources.

They could contrast their high growth rates with Europe s high levels of debt.

Fiscal deficits must be cut to reduce debt levels.

That is why countries build up debt levels that put them in the danger zone.

In Europe, the market for Greek debt has frozen, and interest rate spreads between Irish and German euro denominated debt recently reached alarming levels.

The main reason for the lag is not simply low demand or large debts.

The average high debt episodes since 1800 last 23 years and are associated with a growth rate more than one percentage point below the rate typical for periods of lower debt levels.

This means extending the maturity dates of debts and reducing the interest rate on the new debt to levels much lower than currently unsustainable market rates.

Currently, they are wrestling with widening sovereign debt problems and high unemployment.

The stock imbalances include large and rising public and private debt as a share of GDP.

A long term alternative requires some capacity to write down debt where it has reached excessive levels.

Five years on, public, private, and external debt are at record levels in many countries.

In Brazil, the consequences of those crises were an inflationary spiral and an increase in foreign debt to stratospheric levels.

Such profligacy has led to levels of debt that will become unsustainable if we do not act.

Private leverage levels, as much as the public debt burden, must therefore be treated as crucial economic variables.

Reinhart and Rogoff s research broadly shows that GDP growth is slower at high levels of public debt.

But, for now, a complete meltdown seems distinctly less likely than gradual stabilization followed by a tepid recovery, with soaring debt levels and lingering high unemployment.

But Portugal s debt levels are still highly problematic by historical benchmarks (based on my research with Carmen Reinhart).

First, high levels of debt will limit both welfare benefits and future governments ability to swap favors for votes.

These subsidies are dangerous they encourage excessive risk taking and very high leverage meaning a lot of debt relative to equity for each bank and far too much debt relative to the economy as a whole.

First, different countries have different capacities to sustain public debt, depending on their initial deficit levels, existing debt burden, payment history, and policy credibility.

But now sovereign spreads in the peripheral eurozone countries have returned to the levels seen at the peak of the crisis in May.

Great Britain, Belgium, and even France find themselves at a debt level that does not leave much hope that they will escape unscathed.

As the crisis gathered pace, Ukraine was completely cut off from international financial markets, despite sound public finances and low foreign debt.

A long term alternative requires some capacity to write down debt where it has reached excessive levels. But it is also necessary to establish an iron clad guarantee of some part of the outstanding debt, in order to remove fear of a complete write down.

In some countries with high levels of debt and impaired growth, fiscal stimulus could raise the risk premium on sovereign debt and be counterproductive others have more flexibility.

It can be done Germany is reducing its debt burden to sustainable levels while strengthening its long term growth prospects.

Structural reform however desirable it may be for the longer term simply is not a remedy for these countries short term growth conundrum.

As for fiscal policy, it is already in high gear and needs gradual tightening over several years, lest already troubling government debt levels deteriorate even faster.

For example, many projects are completed toward the end of the budgetary cycle, generating a backlog of unpaid bills in the MFF s later years. If they are not addressed through an MFF amending budget, they risk fueling a run up in debt.

The United States and the European Union, now burdened by high debt and low growth and therefore preoccupied with domestic concerns are no longer able to set global rules and expect others to fall into line.

It is sobering to note that almost half of high debt episodes since 1800 are associated with low or normal real (inflation adjusted) interest rates.

Similarly, Guyana will have its debt reduced by more than 8 of GDP. The level of debt relief will be even greater once the World Bank and the African Development Bank finalize their own programs in the months ahead.

Those that do relatively well share three characteristics low levels of public debt, limited dependence on exports or capital flows, and robust democratic institutions.

Fiscal austerity helped to reverse the rising trend in public debt, and then reduced it to more manageable levels (debt nonetheless remains comparatively high).

It virtually guarantees that Greece, Spain, and others with large private and public debts will be condemned to years of economic decline and high unemployment.

While the IMF s primary scenario is that Irish and Portuguese debt levels will soon stop rising, it comes with a chilling litany of downside risks.

High levels of sovereign debt, together with the behavior of parts of the financial sector, have amplified the crisis in the eurozone and raised important issues of confidence that now require a systemic answer.

Then there is the destruction of Venezuelan industry, the spectacular increase in violence, the explosion of foreign debt, and the depletion of foreign currency reserves that has accompanied Chávez s so called Bolivarian socialism of the twenty first century.

The second oil shock and high international interest rates, coupled with a lack of foreign investment, led to significant internal and external imbalances and high levels of foreign debt.

At that point, it will be important to develop policies to reduce gradually the relative level of government spending in order to shift to fiscal surpluses and reduce the debt burden.

First, a trillion dollar bailout package in May prevented an immediate default by Greece and a break up of the eurozone. But now sovereign spreads in the peripheral eurozone countries have returned to the levels seen at the peak of the crisis in May.

How did this happen? They note that, in general, debt levels and leverage rose during the decade preceding these crises, propelling increases in asset prices for a long time.