- Japan, Sudan, and Greece have the highest levels of national debt worldwide compared to their GDP, landing them in a somewhat risky economic position.
- In 2019, the US ranked 13th globally for its public debt compared to its GDP, owing $22,773 billion USD, but that is predicted to rise to almost $30,000 billion by 2024.
- Public debt can enable a country in invest in a better future, but too much can cripple it.
Just like individuals, countries can have a lot of extra cash for spending, or be laden with debt. Owing debt doesn’t necessarily mean that a country (or a person) is unsuccessful. It just means they have had to, or chose to, take some monetary risks to reach their goal of success. In fact, some experts say a bit of debt is a good thing to have. Too much, however, can be crippling on both a personal and national level.
National debt or public debt is the amount of money a government owes to others. These creditors can include other countries, institutions like the World Bank and the International Monetary Fund, and creditors within its own country, which are called domestic creditors, and can often be businesses.
It is important to note that not all countries calculate their public debt in the same way. Some include the debt owed by lower levels of government within the country, such as provinces, states, or municipalities. Others only consider federal levels of debt. In order to ensure that you are making a fair comparison, you must be comparing countries that calculate their national debt in the same way.
Is national debt the same as external debt? They sound similar but they are actually different. National or public debt is that owed by a country’s government, whereas external debt is that owed by the government to foreign creditors and by the private sectors (ie, businesses).
A nation’s public debt is often compared to its gross domestic product. This can give investors an idea of how likely the country is to be able to pay off its national debt. Gross domestic product (GDP) is the value of goods and services produced and provided in a country throughout one year.
Taking on public debt can be good for a country as it can provide funding for economic growth and a better life. Money obtained through public debt can help a country build reliable roads and infrastructure, invest in education, and even contribute to its old-age pension fund. In these ways, public debt can be a good thing. But it does have its downsides.
In 2019, Japan, Sudan, and Greece had the highest public debt in relation to their GDP.
In 2017, Japan owed about $11.73 trillion USD in national debt. This country also has a huge GDP, $4.971 trillion USD in 2018, and one of the largest economies on the planet. One of the reasons the country has a high amount of debt is that it currently imports more than it exports in terms of monetary value. Most of Japan's imports come from the US and China, and this imbalance in the value causes a trade deficit. The global financial crisis of 2007 to 2009 also put stress on Japan’s economy, causing it to become unstable. All things considered though, this nation could still fare well. It has kept its inflation rate down, employment up, and its GDP is expected to continue to grow in the next ten years.
Sudan’s national debt sat at about $64 billion USD in 2018, well below Japan’s yet still high. Unfortunately, experts predict it will rise to a whopping $1,276 billion USD by 2024. Sudan has had its fair share of troubles including the civil war in 2013, and a massive loss of oil revenue which have both rocked its economy. Oil exports once accounted for about 95% of the country’s exports but the war damaged oil infrastructure, reducing the ability to export it. The global oil price slump in 2015-2016 also had a large effect on Sudan.
Greece is no stranger to debt. In the last decade, the country has maintained a relatively high yet steady amount of national debt. It is predicted that by 2024 Greece's debt will sit at about $373 billion USD, just slightly higher than where it is today at $370 billion USD. Greece’s national debt will likely decrease slowly over time, but some of this depends on whether or not it chooses to stay within the European Union.
During the 1950s through the 1970s, Greece’s economy boomed. The Great Recession from 2007 to 2009, as well as the Euro crisis and Greece’s own debt crisis, have hit it hard. The European Union gave Greece large economic bailout packages to save it economically in recent years. Poor governance and unnecessary spending have overwhelmed the nation’s GDP, landing it where it is today.
The Drawbacks to Public Debt
As mentioned, some debt is good. Too much at a national level can damage the reputation of a country, and make it difficult for the nation to obtain more credit in the future, however. When a country has an enormous amount of debt, it can pose a threat to the stability of international trade and finance.
The coronavirus pandemic has crippled economies around the world, as business came to a halt with national lockdown measures. It remains to be seen if most nations will bounce back easily to where they stood before in the global economic rankings, or if some have slid beyond repair. Hopefully, this will not be the case.
Countries With The Biggest Public Debt
|Rank||Country||2019 Debt in relation to GDP|