US interest payments on its national debt are estimated to have surged above $1 trillion on an annualized basis as of the end of October, according to a Bloomberg report this week.
The calculations were based on US Treasury data, which discloses the government’s monthly outstanding debt balances and the average sum of interest it pays.
The annualized cost of debt has doubled in the past 19 months as rising interest rates have made borrowing more expensive and represented 15.9% of the entire federal budget for fiscal year 2022 as of last month, the outlet said.
“This high proportion of interest payments as a share of federal spending has precedent, as the portion before 2000 was over 14% in most years,” Bloomberg analysts wrote in a note.
“The challenge for the government is tempering mandatory spending and trying to reduce the need to issue more debt. That’s the reason we see interest payments climbing even though we forecast lower Treasury yields.”
Concerns are mounting over US fiscal policy amid massive government borrowing and soaring interest payments on the debt pile, the outlet noted.
The worsening dynamics already led Fitch Ratings agency to downgrade US government debt in August.
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