Top 10 Countries Having The Highest Debt to GDP Ratio
|Top 10 Countries Having The Highest Debt to GDP Ratio|
|Table of Contents|
What is Debt to GDP ratio?
A debt-to-GDP ratio is an economic term that compares a country's public debt to its GDP, which measures the total value of all goods and services produced. The debt-to-GDP ratio, which is expressed as a percentage and provides a quick estimate of a country's ability to repay its current debts, is frequently used to assess a country's economic stability and health. It is frequently estimated alongside metrics such as GDP per capita, GDP growth, GNP, and GNP per capita, all of which are related to one another.
Debt repayment is likely to be straightforward for countries with low debt-to-GDP ratios. In countries with low income production or excessive debt, the debt-to-GDP ratio is frequently high. Debt-to-GDP ratios greater than 77 percent can be detrimental.
When it comes to debt-to-GDP ratios, there are regional trends. Asia, particularly Japan, has some of the highest ratios, while the Middle East, particularly Brunei and Kuwait, has lower ratios. In some countries, high debt-to-GDP ratios can jeopardize economic stability and growth prospects by limiting their ability to invest in infrastructure, social programs, and other development initiatives.
Top 10 Countries Having The Highest Debt to GDP Ratio
1. Japan – 262%
Japan has the highest debt-to-GDP ratio (262%). The country's high ratio is due to persistent budget deficits and extensive government borrowing to fund various initiatives, such as economic stimulus packages and social welfare programs.
Rising social welfare costs, combined with a rapidly aging population, large spending packages, and a shrinking labor force, have driven Japan into a $9.8 trillion debt. This debt is mostly in its own currency; the central bank owns some of it, while domestic savers own the rest. Only 7% of it is owned by foreigners. As a result, the country is not entirely reliant on the generosity of strangers.When it comes to debt-to-GDP ratios, there are regional trends.
2. Venezuela – 241%
Venezuela is one of the countries with the highest external public debt, estimated at more than $150 billion. Political corruption, business closures, unemployment, human rights violations, high oil dependence, and chronic food and medicine shortages are the primary causes of this crisis. The country has been heavily reliant on oil, and output is expected to fall by 2.5% in 2022. GDP levels have shrunk by three-quarters as a result of inadequate investment in other sectors, worsening this ratio.
3. Greece – 193%
Greece has one of the highest government debt-to-GDP ratios in the world. The country's debt-to-GDP ratio began to skyrocket during the 2008 financial crisis, worsening further due to structural economic weaknesses and a lack of flexibility in monetary policy. However, primary balances have improved in recent years, and debt to GDP is expected to fall to 140% in 2024.
4. Sudan – 182%
Sudan has entered a major debt crisis as a result of poor economic policies, years of conflict, and sanctions. However, the IMF and World Bank approved Sudan's eligibility for debt relief in 2021, citing the country's commendable achievements in economic reform. Such debt relief will help Sudanese improve their living standards, reduce poverty, and expand their economic prospects.
5. Lebanon – 172%
Interest payments have crippled Lebanon's public finances, consuming half of the country's revenues. High interest rates, wage increases in the public sector in 2017, and the costs of post-war reconstruction have all contributed to the country's financial problems.
6. Eritrea – 165%
Eritrea's high debt-to-GDP ratio can be attributed to a lack of access to international markets, long years of political instability, and economic sanctions. Long-term debt-financed budget deficits will also continue to be the cause of the high ratio. However, as global demand for metals rises, revenues are gradually increasing. Eritrea's external debt was $744,742,728 as of 2021.
7. Singapore – 160%
At 160%, Singapore has the seventh highest debt-to-GDP ratio. The high ratio of the city-state is primarily due to its unique economic structure and government policies. As part of its long-term economic planning, Singapore has strategically accumulated substantial financial assets, including reserves.
8. Libya – 155%
Libya has the eighth highest debt to GDP ratio at 155%. The country's elevated ratio can be attributed to ongoing political instability, armed conflicts, and disruptions in oil production. The lack of financial stability and the absence of a unified government have hindered Libya's ability to address its debt challenges effectively.
9. Italy – 151%
Italy has a massive public debt of approximately 145% of GDP and generally runs a current account surplus. Approximately 45% of the stock is owned by foreigners, with the remainder held by wealthy Italian savers. Italy's national government debt was nearly $3 trillion as of 2023. However, given fiscal support and natural gas supply diversification from Russia, the country's economy is expected to show some resilience.
10. Bhutan – 135%
Bhutan has the tenth highest debt-to-GDP ratio in the world, at 135%. The ratio in the country has risen as a result of investments in infrastructure development, education, and healthcare. Bhutan's reliance on external borrowing to fund these initiatives has contributed to the country's elevated debt levels, despite the fact that the country has managed debt sustainability through prudent fiscal policies.
Top 10 Countries with the Lowest Debt-to-GDP Ratios (%)
1.Brunei — 3.2%
2.Afghanistan — 7.8%
3.Kuwait — 11.5%
4.Congo (Dem. Rep.) — 15.2%
5.Eswatini — 15.5%
6.Burundi — 15.9%
7.Palestine — 16.4%
8.Russia — 17.8%
9.Botswana — 18.2%
10.Estonia — 18.2%
Low debt-to-GDP ratio countries are more likely to be able to repay their debts with relative ease. Nations with high debt-to-GDP ratios are those whose economies struggle to generate income or have an excessive debt. Debt-to-GDP ratios above 77% can stifle economic growth and (in some cases) put a country at risk of default, wreaking havoc on its economy and financial markets.
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