Rising public expectations push global debt to record high
Governments are moving to lower cost, higher value models.
Global government debt has surged to US$95.3 trillion in the last quarter of 2024, driven by rising public demands and the aftermath of the COVID-19 pandemic. As governments battle on multiple fronts, the pressure to deliver more services with fewer resources is intensifying.
Ellen Derrick, Asia-Pacific Government and Public Services Leader at Deloitte, said the debt surge reflects the difficult trade-offs governments are facing across the region. “Debt has surged because governments are firefighting on multiple fronts. First of all, the pandemic stimulus left governments with huge legacy bills. In Australia, the JobKeeper stimulus package cost $90 billion. In Japan, we have already seen large debt ratios rise,” she said.
She added that structural pressures are intensifying. “Aging populations, health costs, particularly in geographies like Japan and South Korea, are really challenging,” Derrick explained. “Governments are investing in defense and climate resilience. We're seeing significantly increasing defense budgets in India, in Japan, in Australia, across all of Asia Pacific. And, of course, the investment into more climate resilience across all of Asia Pacific, and particularly into the Pacific region as well.”
Meanwhile, Derrick said that public expectations are escalating faster than governments can adapt. “We now look to governments, and we expect the same speed and convenience that we get from the private sector,” she said. “Everyone wants a similar type of seamless service delivery.”
Hamza Ali Malik, Director of the Macroeconomic Policy and Financing for Development Division at UN-ESCAP, attributed the rise in debt to the pandemic’s economic impact. “Governments had to support people and businesses, which led to a substantial increase in debt. Since then, debt servicing costs have also risen,” Malik said.
Public expectations are rising faster than government revenues, with citizens demanding faster, digital, and more equitable services. “People expect governments to perform like Amazon or Netflix, and these heightened expectations put significant pressure on budgets,” Derrick noted.
To manage rising debt, both experts emphasise the need for innovation and improved efficiency. Derrick suggested that governments need to focus on outcomes, not just activities, leveraging digital solutions and AI to deliver services more efficiently. Malik highlighted the importance of debt restructuring, greater transparency in borrowing, and enhancing domestic resources, such as taxes. “Governments should tax fairly and spend smartly to manage debt effectively,” he concluded.
