Debt to GDP Ratio by Country 2022

In economics, the debt-to-GDP ratio measures how much a country’s government debt is relative to its GDP.

Debt-to-GDP ratio is a percentage measure of a country’s capacity to repay its obligations and is often used to assess economic health and stability. It is more probable that countries with a low debt to GDP ratio can repay their loans with relative ease.

Debt-to-GDP ratios tend to be higher in countries with weak economies or excessive debt. As a result, debt-to-GDP ratios exceeding 77% may harm economic development and, in certain situations, a nation at danger of defaulting on its loans.

The 12 countries with the largest debt ratios in the world ( percent )

1. Venezuela — 350%
2. Japan — 266%
3. Sudan — 259%
4. Greece — 206%
5. Lebanon — 172%
6. Cabo Verde — 157%
7. Italy — 156%
8. Libya — 155%
9. Portugal — 134%
10. Singapore — 131%
11. Bahrain — 128%
12. United States — 128%

According to the IMF, Venezuela will have the highest debt-to-GDP ratio by 2020. With oil reserves that might rival Saudi Arabia and Russia but a state-owned oil firm that has been widely criticized for its management, Venezuela’s GDP has fallen in recent years.

With each of these developments, Venezuela has taken out enormous debts and attempted dubious steps to control the country’s soaring inflation.

With a percentage of 266%, Japan comes in second. In 1992, the Nikkei (Japan’s stock market) went into free fall.

Banks and insurance businesses were bailed out by the government and given low-interest loans. Consolidated and nationalized banks were employed to boost the economy and other stimulus measures. These initiatives, however, led to a huge growth in Japan’s debt.

The United States ranks 12th in its debt-to-GDP ratio, making it the most heavily indebted country. Despite having the world’s largest GDP, the United States spends more than it makes.

The world’s highest military budget, tax cuts (which lower government revenue and seldom produce a proportionate boost in economic development), COVID-19 relief initiatives, and mandatory but underfunded programs like Medicare are major contributors to the national debt.

This is a list of the top 12 countries with low debt-to-GDP ratios ( percent ):

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%

Even though a low debt ratio to GDP is often desired, a healthy economy is not necessarily indicated by this ratio. Debt-to-GDP ratios are low in either stagnating or developing countries because of the low levels of both debt and GDP.

In truth, borrowing money from another nation and putting it toward economic development may benefit a country’s economy in the long term.

Also See: Countries Without Central Banks 2022

To put it simply, if the borrowing country’s debt-to-GDP ratio increases briefly, it may be possible to pay down the debt and reap the benefits for years to come. As a result, this borrowing might backfire if economic growth is uncertain (as it arguably has for Venezuela).