The indicator public debt/GDP it is one of the tools most used by analysts and investors to evaluate the sustainability of a country’s debt and its ability to meet financial obligations. This ratio allows us to understand the extent to which public (or sovereign) debt affects the national economy and allows us to compare the debt of a country with others. Getting into debt difficulty can be a painful process, which risks threatening macroeconomic stability and compromising the development of a country for years. The International Monetary Fund (IMF)which brings together 190 member countries, plays a key role in supporting nations in managing debt risks and resolving financial difficulties. Compared to the debt/GDP indicator, it Most indebted state in the world turns out to be the Sudanfollowed closely by Japan. Italy is in ninth place with a public debt of 135%. Given the enormous difference between the economies of the two countries as well as those of the other states in the classification present in this article, it must immediately be understood that the data must be interpreted and does not give absolute indications.
What does a high or low debt-to-GDP ratio mean?
A high debt/GDP ratio (for example, above 100% or even 200%) indicates that a country has public debt equal to or greater than its annual economy. Countries with high debt may face difficulties in refinancing their debt, especially in periods of low economic growth or when interest rates rise. If this ratio grows unsustainably, it could mean that the country is having difficulty repaying its debts, or that debt is growing faster than GDP.
On the contrary, a low debt/GDP ratio (e.g., less than 50%) indicates that a country is relatively debt-ridden small compared to the size of its economy. This suggests a greater ability to manage debt without compromising economic growth or financial stability.
However, it is important to underline that a country with a high debt but a High GDP (as in the case of Japan or the United States) may be better able to manage its debt than a country with similar debt but with a Lower GDP (like Sudan). There ability to generate incomethrough taxes, economic activity and other sources, is in fact higher in countries with robust economies.
The ranking of countries with a debt/GDP above 100% (2023)
According to data from Trading Economicswhich collects information from authoritative institutional sources such as the IMF, the World Bank, the OECD, Eurostat and other government agencies, several countries have public debt that exceeds the value of their annual GDP. Here is a list of the main countries with a debt/GDP ratio above 100% in 2023, i.e. those countries whose public debt is greater than the value of GDP.
- Sudan – 256%
- Japan – 255%
- Lebanon – 195%
- Singapore – 168%
- Eritrea – 164%
- Greece – 162%
- Argentina – 155%
- Venezuela – 146%
- Italy – 135%
- Bhutan – 123%
- United States – 122%
- Bahrain – 121%
- Cuba – 119%
- Cape Verde – 115%
- France – 111%
- Canada – 108%
- Spain – 108%
- Sao Tomé and Príncipe – 105%
- Sri Lanka – 104%
- Belgium – 103%
- Mozambique – 101%
Sudan: The most indebted country in the world
In 2023, the Sudan it is the country with the highest debt/GDP ratio in the world, with an incredible 256%. This high level of debt is the result of decades of conflict, political instability and losses of vital resources like oil. The main causes of this debt crisis are therefore historical, geopolitical and economic, and continue to put the country in difficulty.
Japan: The advanced country with the highest debt
Even among the major advanced economies, we find high debt rates. Japanfor example, has a debt-to-GDP ratio that exceeds 255%i.e. Japanese public debt is more than 2.5 times the value of its annual economy. Despite this, the large size of the Japanese economy, its ability to generate wealth and the fact that most of the debt is actually in the hands of Japanese individuals (individuals and companies that have purchased government bonds) make this debt relatively sustainable, even if the situation remains worrying in the long term.
The case of US sovereign debt
If we took public debt into consideration in absolute terms, without relating it to GDP, the ranking would change slightly. The United Statesdespite having a very high GDP (over 27,000 billion dollars), have a public debt of over 33 trillion dollars. This causes the debt/GDP ratio to be relatively lower (approx 122%), but the absolute amount of debt still remains one of the highest in the world.
The Italian public debt
THE’Italy it is in a delicate position. His public debtwhich exceeds the 135% of GDPis the result of historical factors, high government spending, slow economic growth and financial crises. Despite these difficulties, the country avoided a debt crisis thanks to the support of European Central Bank and prudent management of public finances. However, the sustainability of Italy’s debt remains a major concern for the future. The economic reforms implemented by various governments are not sufficient to guarantee a significant reduction in debt, and the challenge for Italy will be to find a balance between debt reduction and the need to stimulate economic growth.
Brunei: the country with the lowest debt rate
Finally, in last place in the ranking we find the Bruneiwhich represents an exceptional case: with a debt/GDP of just 2.3%is the country with the lowest debt rate in the world in 2023. This result is mainly due to its wealth derived from natural resourcesespecially oil and gas. Thanks to these resources, Brunei has been able to avoid debt to finance its budget and projects. Political stability and centralized control of resources have further contributed to keeping the country free from major financial pressures.
