There’s nothing wrong with debt per se – in fact, some of the world’s biggest economic powers have a lot of it. Yet there’s a fine line between a healthy and an unhealthy amount. In 2010, the World Bank published a study which revealed that a 77% debt-to-GDP ratio was the tipping point, and that countries which stayed above this threshold for long periods saw significant slowdowns in economic growth. Using the most recent data from the International Monetary Fund (IMF)’s World Economic Outlook (October 2019), here are the most in-debt nations on the planet as we enter 2020. (We haven't included countries with economies smaller than $10 billion (£7.6bn) GDP.)
Despite benefitting from the Heavily Indebted Poor Countries debt relief initiative in 2005 – which allowed for 100% relief of its debt by the IMF, the World Bank and African Development Fund – Zambia has been borrowing heavily since 2012. The key reasons for borrowing have been to improve roads, infrastructure, energy, railroads and telecoms. The country had debt of US$18.9 billion (£14.3bn) in 2019. However, the outlook isn’t all bad: economic growth is projected at 4.2% in 2019 and 4.3% in 2020, according to the African Development Bank Group.
Brazil may have same debt-to-GDP ratio as Zambia, but in terms of actual debt the South American country has a lot more: US$166.6 billion (£126.5bn) to be exact. The rise in Brazil’s national debt has been fueled by increased interest payments, higher borrowing and a weak exchange rate, according to Reuters. The country suffered a crippling recession in 2015 and 2016 and its economy shrank by almost 7%, and in the two years since then growth has been at a sluggish rate of 1.1% a year. In 2019, growth is projected to be 0.9% and is predicted to rise to 1.6% in 2020 according to BBVA Research.
Argentina is looking like it may go into its ninth debt default soon (where a borrower cannot repay its debt and interest because of late or missed payments). This will come as a blow following four years of relative financial stability for the country, which had US$336 billion (£255.2bn) worth of public debt in 2019. But poor economic conditions are nothing new for Argentina, which has spent a third of the time since 1950 in recession, the second longest time in the world behind the Democratic Republic of the Congo. Things aren’t looking up either: the Argentinian economy, which is the second largest in South America after Brazil, is expected to shrink in 2019 and 2020.
Jamaica’s financial crisis of the 1990s plunged it into debt, which reached a massive 147% of GDP in 2013. In that year, the Economic Programme Oversight Committee (EPOC) was formed, in agreement with the IMF, in order to implement economic reforms. The initiative, which was widely supported by government, business, media and unions, helped Jamaica’s debt to fall to its current 93.5% rate, which reflects US$14.3 billion (£10.9bn) of debt, as well as keeping inflation low and stable, and helping to decrease poverty and unemployment rates. While there’s still a long way to go, Jamaica has taken big strides in reducing its debt.
For Jordan, crises in neighboring Syria and Iraq have resulted in an influx of refugees, rising social welfare costs and disruption of trade. All of this has put a strain on the economy. Real GDP growth has reduced from 2.1% in the second quarter of 2018 to 1.8% during the same quarter of 2019. However, the IMF has recognized Jordan’s need for financial help as it tries to deal with its US$41.75 billion (£31.7bn) debt, and at a conference in March this year donors were said to be working to provide grants and other financial support.
A third of Angola’s GDP comes from its oil sector, according to the World Bank, so it was hit hard by the oil price drop of 2014 – its public debt went from 39% in late 2014 to 95% of GDP in October 2019. It currently has US$62.8 billion (£47.7bn) of debt. In order to shift away from its dependence on oil, Angola is in the process of transforming from a state-led oil economy to a private sector model.
The 2008 financial crisis led to a Cypriot property market crisis in 2012. This happened because banks extended mortgages to those who couldn’t meet payments, so the market collapsed and fewer people wanted to buy properties, pushing down house prices and sending developers into bankruptcy. The country had to bail out the banks, borrowing from the EU and IMF, increasing debt from 65.7% in late 2011 to 109.4% of GDP at the end of 2016. However, Cyprus’ debt has been falling since then, reaching US$23 billion (£17.5bn) in 2019.
Since 2009, Spain has been part of the EU’s Excessive Deficit Procedure, which means that the EU has been keeping tabs on its economy to ensure it manages its budget responsibly. In June this year, Spain exited the program after successfully reducing its deficit (the difference between the government’s expenses and its revenues) even though it still owes a huge public debt of US$1.3 trillion (£1tn). But things are looking up: last year, the economy grew by 2.5%, marking the fifth consecutive year of growth, although high unemployment and poverty rates are still huge problems for Spain.
Just tipping past the 100% mark, like many countries Belgium had to rescue one of its biggest banks, Fortis Bank, during the 2008 financial crisis. However, it sold the bank to BNP Paribas shortly after. Another significant contribution to Belgium’s national debt was the government’s decision to bail out the Belgian branch of the bank Dexia in 2011. Currently, the economy is performing better than expected and its debt-to-GDP ratio, while still high, is falling. The country's debt was US$515.8 billion (£391bn) in 2019.
The Middle Eastern country of Bahrain has an economy that’s largely dependent on oil and gas. Last year, after a prolonged period of high debt due to low oil prices, neighboring Saudi Arabia, Kuwait and the UAE came to Bahrain’s assistance with a $10 billion (£7.6bn) bailout pledge. In order to fuel economic growth and balance the books, the government has been investing in the financial technology (fintech) sector in the hope of turning Bahrain into a new fintech hub. Bahrain's public debt is currently US$38.7 billion (£29.4bn).
Despite the fact it's currently experiencing the longest economic expansion in history, American national debt has reached rates not seen since the 1940s. On the campaign trail, President Trump promised to lighten the load of national debt yet he's done anything but, with the 2017 corporate tax cut projected to slow down growth as interest rates increase. The country's debt-to-GDP ratio currently stands at 106.2%, while the actual value of the US's public debt is a whopping US$22.8 trillion (£17.3tn).
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The southern African nation of Mozambique is one of the poorest countries in the world and its debt-to-GDP has shot up in the past decade, from less than 54% in 2013 to 108.8% today. Its public debt totals US$16.2 billion (£12.3bn). The country was badly hit by Cyclone Idai earlier this year, which killed more than 1,000 people in Mozambique, Zimbabwe and Malawi, as well as wiping out farms and transport links. However, Mozambique has pinned its hopes on recently discovered offshore gas reserves, which could make it a major gas exporter and improve growth.
While Singapore has one of the highest debt-to-GDP ratios in the world, it shouldn’t necessarily be cause for panic. Singapore borrows money not to spend, but to invest in infrastructure projects which will later generate money. In fact, it can't spend the money in any other way as its Constitution and the Government Securities Act prevents it from doing so. Singapore has generated a public debt of US$419.1 billion (£318bn) this way. It is worth noting that the 114.1% figure reflects the gross, rather than net, debt-to-GDP ratio. If you look at the net figure, which takes into account the government’s financial assets, as well as its debts, Singapore’s assets are actually worth more than its debts.
The Portuguese economy was bailed out by the EU in 2011, and since then it’s been growing at its fastest rate in two decades. During the financial crisis, the state intervened in the banking sector, which plunged it into massive debts. Nowadays, the debt-to-GDP ratio has been slowly falling since 2015, although some fear that the country has not invested enough into public services, which may undermine economic growth. Portugal's public debt is currently US$274.1 billion (£208.1bn).
For the past two decades Italy’s economic growth has been virtually nonexistent. This has resulted in lower productivity, limited resources to deal with the problems caused by climate change – such as Venice’s floods – and made it harder to fund its expensive pension system, among other issues. The country currently has US$2.6 trillion (£2tn) of public debt which looks set to continue growing. Italy is breaking the EU rule that states countries with a debt-to-GDP ratio above 60% must reduce it by a 20th every year for three years, and it risks being placed in Excessive Deficit Procedure (EDP).
Lebanon is currently gripped by an economic crisis which has seen youth unemployment rise to 37%, with companies going bust and workers being laid off. Meanwhile, the government spends half of its revenues simply paying off interest from loans, while increasing public sector wages and higher interest rates have worsened the debt crisis. With electricity in short supply and blackouts frequent, in April the Lebanese government approved an electricity reform plan that would make the power supply more reliable, which is key to improving its chances of economic growth. But in June the plan suffered a setback as the country's constitutional court accepted an appeal that put a stop to the tendering process for the construction of six power plants. That said, compared to other countries with high debt-to-GDP ratios, Lebanon's public debt is quite low at US$99.4 million (£75.5m).
At 176.6%, Greece’s debt-to-GDP ratio is well above the eurozone average, which was 85.9% in July 2019 according to Eurostat. In 2010, the economy was bailed out by the EU and IMF but the bailout came with a price – substantial austerity measures. Job prospects were harmed, with unemployment rates as high as 27.5% at the height of the crisis in 2013. However, since the bailout program ended in 2018, things are finally looking up. The economy has returned to growth since 2017, at a rate of around 2% annually. Greece's public debt currently stands at US$371.9 billion (£282.2bn).
Sudan was hit hard by the secession of its southern states and formation of South Sudan in 2011, which meant it lost oil reserves that had represented half of the government’s revenues. One reason for Sudan’s debt is US economic, trade and financial sanctions, which have stymied economic development. Despite these being lifted in 2017, the country is still feeling the effects. Another reason is austerity measures imposed by the IMF, which have stunted economic growth and caused political and social instability. Sudan's public debt is currently US$92.2 billion (£70bn).
Japan has the current highest debt-to-GDP ratio at a huge 237.7%. Since 1997, debt has been on the increase, reaching US$12.2 trillion (£9.3tn) in 2019, while GDP growth has stagnated. In order to deal with the debt, the Japanese central bank has simply reduced interest rates and bought government bonds, which has put more money into the financial system. Japan insists it’ll be able to repay its debts one day, yet with a population that’s both aging and shrinking it looks unlikely that the government will balance the books by itself and it may be reliant on foreign investors for help.
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