Interest rate minus growth (r − g)
The gap between the average interest rate a government pays on its debt (r) and nominal growth (g). When r is below g, the debt ratio shrinks on its own; when r is above g, it grows on its own, before counting any new borrowing.
Example
Brazil pays an average of about 8.3% on its debt, while its economy grows about 6.7% in money terms: interest alone adds about 1.4 points of GDP to its debt ratio this year.
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