The Strategist

Top 15 countries with the largest external debt

10/06/2016 - 12:39

We live in a world with very low interest rates in most developed countries. This means that debts are less expensive to governments and private individuals. Moreover, this state of affairs encourages spending.

Global Competitiveness Survey examines financial health and risks of the world’s countries.

WEF Global Competitiveness Index includes 12 indicators. The rating composed annually on the basis of public information.

One of the most interesting and important rankings, compiled within the study, is list of countries by level of government debt.

National debt to GDP ratio indicates ability of a country's economy to pay its debts without harm to its financial situation. The lower the ratio, the better. Below are 15 the most heavily indebted countries of the world.

15. France

Debt: 96.8%

This year, the French government has substantially increased the ratio of national debt to GDP. The country is struggling with low productivity and low wages.

14. Singapore

Debt: 98.2%

This is one of the world’s richest countries. Singapore managed to reduce the national debt to GDP ratio to 98.2% compared to 103.8% in the last year. Meanwhile, the government seeks to find new ways to increase productivity and GDP.

13. Spain

Debt: 99%

Spain, like many other Eurozone countries, is trying to increase productivity and stimulate economic growth. In addition, several years the country has been trying to solve the unemployment problem.

12. Barbados

Debt: 103%.

This country, considered a tax haven, is the richest and most advanced country in the eastern Caribbean. However, prospects for economic growth there are quite hazy. The reason is the austerity measures, which are designed to overcome consequences of a credit crisis that occurred 8 years ago.

11. USA

Debt: 105.8%.

The country is at a crossroads because of oncoming election. It is also important to note that markets expect a further increase of the US Fed’s interest rates, which could happen as early as this December.

10. Belgium

Debt: 106.3%.

This country is a home for the most powerful organization in the world, and the most influential people live there. All this is thanks to Brussels, the European capital. However, the country still has a very high level of debt in relation to GDP. In addition, the WEF noted that the country has difficulties with labor and tax laws.

9. Cyprus

Debt: 108.7%.

Over the last year, the country has managed to reduce the ratio of debt to GDP, compared with last year's figure of 112%. Cyprus is still trying to rebuild its economy, which has suffered during the banking crisis.

8. Bhutan

Debt: 115.7%.

This small Asian nation is closely tied to India, and is highly dependent on in areas such as financial assistance or foreign specialists in infrastructure construction.

7. Cape Verde

Debt: 119.3%.

The economy of this island nation is focused on the service sector as the resource base is almost absent. This means that the country imports 82% of food, which, in turn, makes Cape Verde vulnerable to market fluctuations.

6. Jamaica

Debt: 124.3%.

The country’s services sector accounts for 80% of GDP. However, high levels of crime, corruption and large-scale unemployment seriously constrain the local economic growth.

5. Portugal

Debt: 128.8%.

Portugal has repeatedly received support as the country is trying to recover from the crisis.

4. Italy

Debt: 132.6%.

Ratio of debt to GDP in Italy is the second largest in the euro zone. WEF also notes that Italy is going to have a referendum soon, which doesn’t add much clarity in the situation, either.

3. Lebanon

Debt: 139.1%.

This country used to be a popular touristic destination. However, war in Syria and internal political contradictions have had a huge negative effect on the economy and the population as a whole.

2. Greece

Debt: 178.4%.

The country is still trying to solve debt problems that stem from 2010. Greece cannot pay its debts to international creditors, and even new aid packages do not have any positive impact on the economy.

1. Japan

Debt: 248.1%.

The country’s ratio of public debt to GDP is huge. Japan's economy is growing very slowly. Not long ago, the Central Bank of Japan introduced a negative interest rate.