A couple of years ago, two young Colombian journalists, Valerie Cifuentes Martínez and María Camila González, became alarmed about their nation’s surging debt. All the more so since voters seemed so ignorant about the fiscal choices. So they launched a buzzy multimedia platform called Economía para la Pipol (Economics for the people) to educate voters, particularly those in Gen Z, about debt policy. “We need to change how we communicate,” Cifuentes recently told finance officials from around the world at an OECD meeting.
Investors and governments should pay attention. As the OECD reported this week, average national debt burdens are forecast to hit a record 113 per cent of GDP next year — and this will worsen if a “dark scenario” of lower growth and rising rates emerges due to a long Iran war.
Some countries, such as Portugal, have managed to cut their own ratio recently. But most have not. And many are now trapped in a vicious spiral: rising populism and polarisation make it hard for politicians to impose unpopular reform. But those phenomena are surging in part because fiscal woes and economic pain are sapping public confidence. As a recent OECD report on fiscal communication noted: “Governments are being asked to manage long-term fiscal risks in an environment where public trust and people’s willingness to tolerate trade-offs are low.”