Sovereign Debt in Advanced Economies: Overview and Issues for Congress

This report discusses sovereign debt, which is also called public debt or government debt, and refers to debt incurred by governments. The first section provides background information on sovereign debt, including why governments borrow, how sovereign debt differs from private debt, why governments repay their debt (or not), and how sovereign debt is measured. The second section examines the shift of concerns over sovereign debt sustainability from emerging markets in the 1990s and 2000s to advanced economies following the global financial crisis of 2008-2009, and the challenges posed by high debt levels. The third section analyzes the different policy options governments have for lowering debt levels. It also discusses the current strategy being used by most advanced economies -- fiscal austerity -- and concerns that have been raised about its global impact. Finally, the fourth section analyzes issues of particular interest to Congress, including comparisons between U.S. and European debt levels, how efforts to reduce debt levels could impact the U.S. economy, and policy options available to Congress for engaging on this issue