National debt is a topic that often sparks heated debates among economists, politicians, and the general public.
Just as individuals or companies may borrow money to boost their finances, national governments often borrow money to further their country’s growth or well-being.
This borrowed money becomes part of that country’s national debt. But which countries are at the top of the list when it comes to the highest national debt?
Measured as % of GDP (%GDP)
15. Suriname – 125.70% of GDP
Suriname, a small country in South America, has been grappling with economic challenges, leading to its high national debt.
- Economic Struggles: As report of the World Bank says Suriname’s economy has faced numerous challenges over the years, from fluctuating commodity prices to political instability. These factors have contributed to its increasing national debt.
- Future Outlook: While the government is taking measures to stabilize the economy, it remains to be seen how effective these will be in reducing the national debt.
14. United States – 128.13% of GDP
The United States, the world’s largest economy, also boasts a significant national debt in terms of dollar amount.
- Spending vs. Income: The U.S. government’s spending often exceeds its income, leading to a growing national debt. The last time the U.S. had a budget surplus was in 2001.
- Major Creditors: Interestingly, the countries to which the U.S. owes the most are Japan and China, both of which have significant debts of their own.
13. Bahrain – 129.73% of GDP
Bahrain, a small island nation in the Persian Gulf, has seen its national debt rise significantly in recent years.
- Economic Reliance: In study conducted by Science Direct they say Bahrain’s economy heavily relies on oil, and fluctuating oil prices have impacted its revenues.
- Diversification Efforts: The government is working on diversifying its economy to reduce its dependence on oil and manage its national debt.
12. Bhutan – 132.42% of GDP
Bhutan, a Himalayan kingdom, has a national debt that is quite high relative to its GDP.
- Infrastructure Development: Bhutan has been investing heavily in infrastructure, leading to increased borrowing says the IMF.
- Economic Partnerships: The country has strong economic ties with India, which has been a significant lender.
11. Venezuela – 133.61% of GDP
Venezuela’s economy has been in turmoil for several years, leading to a skyrocketing national debt.
- Economic Crisis: Political instability, hyperinflation, and sanctions have severely impacted Venezuela’s economy.
- Oil Dependency: Venezuela’s reliance on oil revenues has made it vulnerable to global oil price fluctuations says the research beasd on study of a Council Of Foreign Relations.
10. Barbados – 135.40% of GDP
Barbados, a Caribbean island nation, has faced economic challenges that have contributed to its high national debt.
- Tourism Dependency: Barbados heavily relies on tourism, which can be volatile.
- Debt Restructuring: The government has been working on restructuring its debt to manage its economic challenges better.
9. Cape Verde – 145.13% of GDP
Cape Verde, an island nation off the coast of West Africa, has a national debt that is a significant percentage of its GDP.
- Economic Challenges: According to World Bank report Cape Verde faces challenges such as limited natural resources and vulnerability to climate change.
- Foreign Aid and Investment: The country has been seeking foreign aid and investment to boost its economy and manage its debt.
8. Italy – 150.30% of GDP
Italy, one of the world’s largest economies, has a national debt that exceeds its GDP.
Interestingly, while Italy grapples with its debt, there are cities globally that stand out in terms of their economic status, both at the pinnacle of wealth and at its nadir
- Economic Stagnation: Italy has faced years of economic stagnation, leading to increasing debt.
- EU Implications: I have read that As a member of the European Union, Italy’s debt has implications for the entire Eurozone, in study conducted by Columbia University.
7. Lebanon – 150.58% of GDP
Lebanon’s national debt has been a cause for concern for many years.
- Political and Economic Crisis: Lebanon has been grappling with political instability and an economic crisis, leading to a rise in its national debt.
- Future Outlook: The country is seeking international assistance to stabilize its economy and manage its debt.
6. Maldives – 154.39% of GDP
The Maldives, known for its luxury resorts and stunning beaches, has a national debt that is a significant percentage of its GDP.
- Tourism Dependency: According to Observe Research Foundation Maldives heavily relies on tourism, making it vulnerable to global economic downturns.
- Infrastructure Projects: The government has been investing in infrastructure projects, leading to increased borrowing.
5. Singapore – 159.87% of GDP
Singapore, a global financial hub, has a national debt that might seem surprising given its economic prowess.
- Strategic Borrowing: Singapore’s government borrows not because of a budget deficit but for strategic reasons and to develop its financial markets says IMF.
- Strong Reserves: The country has significant reserves, which provides a buffer against its national debt.
4. Eritrea – 179.66% of GDP
Eritrea, a country in the Horn of Africa, has one of the highest national debts relative to its GDP.
- Economic Challenges: Eritrea faces challenges such as limited resources and political isolation.
- Dependency on Remittances: The country heavily relies on remittances from its diaspora, which impacts its economy.
3. Greece – 194.50% of GDP
Greece’s national debt crisis has been in the headlines for many years.
- Economic Crisis: Greece faced a severe economic crisis, leading to bailouts and austerity measures.
- EU and IMF Assistance: The European Union and the International Monetary Fund have provided assistance to help Greece manage its debt.
2. Sudan – 200.35% of GDP
Sudan, a country in North Africa, has a national debt that is more than twice its GDP.
- Economic and Political Challenges: Sudan has faced years of economic and political challenges, leading to its high national debt.
- International Sanctions: Sanctions have impacted Sudan’s economy, further exacerbating its debt situation.
1. Japan – 237.54% of GDP
Topping the list, Japan has the highest national debt relative to its GDP.
- Economic Stagnation: Japan has faced decades of economic stagnation, leading to its high national debt.
- Government Policies: The Japanese government has been implementing policies to stimulate the economy and manage its debt, says the OECD.
15 Countries with the Highest National Debt in 2023 Measured by $ Amount (millions US$)
According to the World Population Review, the following are the countries with the highest national debt in terms of dollar amount.
15. Iran – $674,167 million
Iran, a country rich in oil reserves, finds itself on this list due to a combination of economic sanctions and internal challenges.
- Economic Sanctions: International sanctions have severely impacted Iran’s economy, limiting its trade opportunities.
- Internal Challenges: Domestic economic policies and regional tensions have also played a role in its debt accumulation.
14. Mexico – $746,964 million
Mexico, a country with a diverse economy, has faced challenges that have led to its high national debt.
- Trade Dependencies: Mexico’s heavy reliance on trade with the U.S. has its pros and cons says report by JSTOR.
- Internal Reforms: Efforts to reform various sectors, including energy, have required significant investments.
13. South Korea – $929,584 million
South Korea’s rapid industrialization and technological advancements have come with their set of financial challenges.
- Rapid Development: Infrastructure and technological advancements require capital.
- Geopolitical Tensions: The constant threat from its northern neighbor has led to significant defense expenditures.
12. Australia – $954,634 million
Australia’s economy, heavily reliant on exports, has faced challenges due to global economic shifts.
- Commodity Prices: According to Australina Parlaiment House Fluctuations in global commodity prices have impacted Australia’s revenues.
- Domestic Policies: Investments in infrastructure and social programs have added to the national debt.
11. Brazil – $1,495,729 million
Brazil, the largest economy in South America, has faced economic challenges in recent years.
- Political Instability: Political challenges have impacted economic policies and investor confidence.
- Economic Diversification: Efforts to diversify the economy have required significant investments.
10. Spain – $1,690,788 million
Spain’s economy, once booming, faced significant challenges during the global financial crisis.
- Financial Crisis: I have read in NLM article that the 2008 financial crisis severely impacted Spain’s real estate and banking sectors.
- Unemployment: High unemployment rates led to increased government expenditures.
9. Canada – $2,243,918 million
Canada, known for its stable economy, has also accumulated significant debt.
- Trade Dependencies: Canada’s trade relationship with the U.S. has both benefits and challenges.
- Social Programs: Investments in healthcare, education, and other social programs have contributed to the debt.
8. India – $2,379,040 million
India, one of the world’s fastest-growing economies, has its set of financial challenges.
- Infrastructure Development: Rapid urbanization and development have required massive investments.
- Welfare Schemes: Various government schemes for the poor have added to the expenditures.
7. Germany – $2,968,690 million
Germany, the powerhouse of Europe, has maintained a balanced approach to its finances.
- Economic Stability: Germany’s focus on manufacturing and exports has kept its economy stable.
- EU Responsibilities: According to European Commission being the EU’s largest economy, Germany has taken on significant responsibilities, leading to increased expenditures.
6. United Kingdom – $3,039,338 million
The UK, with its global financial hub in London, has faced challenges post-Brexit.
- Brexit Implications: The uncertainties of Brexit have had economic implications says the report of Bank Of England.
- Global Role: The UK’s global role in finance and politics requires significant expenditures.
5. Italy – $3,169,955 million
Italy’s rich history and culture contrast with its recent economic challenges.
- Economic Stagnation: Italy has faced years of economic stagnation, leading to increased debt.
- Political Challenges: Political instability has often led to inconsistent economic policies.
4. France – $3,329,379 million
France, with its diverse economy, has faced challenges similar to its European neighbors.
- Social Expenditures: France’s focus on social welfare has led to high expenditures.
- Economic Reforms: Efforts to reform the labor market and other sectors have faced challenges.
3. China – $10,115,837 million
China’s meteoric rise as an economic superpower has come with its set of challenges.
- Rapid Development: China’s focus on infrastructure and urbanization has required massive investments.
- Global Ambitions: China’s global projects, like the Belt and Road Initiative, have required significant capital says Council On Foreign Relations.
2. Japan – $13,241,396 million
Japan, with its advanced economy, has faced challenges due to its aging population.
- Aging Population: Japan’s demographic challenges have led to increased social expenditures.
- Economic Stagnation: Japan has faced years of economic stagnation, leading to increased debt.
1. United States – $31,256,897 million
The U.S., the world’s largest economy, has accumulated the most debt.
- Military Expenditures: The U.S.’s global military presence requires significant expenditures according to SIPRI.
- Social Programs: Investments in healthcare, social security, and other programs have contributed to the rising debt.
Factors Influencing National Debt
National debt doesn’t accumulate in a vacuum. Several factors contribute to a country’s debt, and understanding these can provide a clearer picture of the economic landscape.
- Economic Growth: A country’s GDP growth rate plays a crucial role in its ability to manage and repay debt. A robust economy can generate more tax revenue, making it easier to handle debt.
- Interest Rates: The interest rates set by central banks influence borrowing costs. Lower interest rates can lead to increased borrowing, while higher rates can make debt servicing more expensive.
According to the World Bank, interest rates and economic growth are critical determinants of a country’s fiscal health.
Implications of High National Debt
While debt can be a useful tool for countries, excessive debt can have several implications.
- Economic Slowdown: High levels of debt can lead to reduced public and private sector spending, slowing down the economy.
- Credit Rating: A country’s credit rating can be downgraded if its debt levels are deemed unsustainable, leading to higher borrowing costs.
Research by Moody’s Analytics, credit ratings are a reflection of a country’s ability to repay its debt.
Strategies to Reduce National Debt
Countries employ various strategies to manage and reduce their national debt.
- Austerity Measures: Some countries choose to reduce public spending to manage their debt. However, this can be unpopular and lead to economic slowdowns.
- Debt Restructuring: Countries can negotiate with creditors to restructure their debt, leading to more favorable repayment terms.
International Monetary Fund (IMF), says that debt restructuring can be a viable strategy for countries facing debt crises.
What is the difference between national debt and deficit?
A deficit occurs when a government’s annual expenditures exceed its revenues for that year. National debt is the total amount of money a government owes, accumulated over time.
How is national debt-financed?
Governments finance their debt by issuing bonds and securities. These are purchased by individuals, corporations, and foreign governments.
Does a high national debt mean a country is poor?
Not necessarily. Some wealthy countries have high national debts. It’s essential to consider debt relative to GDP and the country’s ability to service its debt.
Can a country ever fully pay off its national debt?
While theoretically possible, in practice, most countries maintain some level of debt as it can be used as a tool for economic policy.
How does the national debt impact ordinary citizens?
High national debt can lead to higher taxes, reduced public services, and can influence a country’s monetary policy, potentially leading to inflation.
Why do countries lend money to other countries with high debt?
Lending money can be a strategic move, fostering alliances, or ensuring economic stability in a region. It can also be a profitable venture if the borrowing country pays back with interest.
Is there an international organization overseeing national debts?
The International Monetary Fund (IMF) and the World Bank are two significant entities that monitor national debts and provide assistance to countries facing debt crises.
National debt, while often viewed in a negative light, is a complex facet of economic policy. It’s a tool that, when used judiciously, can foster growth and stability. However, understanding its intricacies and implications is crucial for informed discussions and decisions.