Japan's external debt snowballed during the "Lost Decade" of the 1990s and has since spiraled. Heavy borrowing to pay for a rapidly aging population and stimulate the perennially stagnant economy continues unabated, having risen to eye-watering levels during the pandemic. Japan's debt now stands at $10.46 trillion, which is more than two-and-a-half times its GDP.

Other countries would be in severe crisis with this level of debt. But Japan is doing just fine, with its creditworthiness in the A category. Japan's debt is mostly held in yen, which is itself a leading reserve currency and owned domestically, so the lion's share of liabilities is subject to the country's minuscule interest rates.

The Japanese government also has a healthy current account surplus and ranks as the leading holder of US debt. This is certainly one country that won't go bankrupt any time soon.

Now discover the world's most powerful nations in 2024 and how they may fare in the future

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