The World's Biggest Debtor Nations
Source: External Debt information from The World Bank, GDP information
from the CIA World Factbook.
Throughout the financial crisis, many national economies have looked to their government and
foreign lenders for financial support, which translates to increased spending, borrowing and in most
cases, growing national debt.
Deficit spending, government debt and private sector borrowing are the norm in most western
countries, but due in part to the financial crisis, some nations and economies are in
20. United States - 101.1% ,External debt (as % of GDP): 101.1% Gross
external debt: $14.825 trillion
19. Hungary - 120.1%,External debt (as % of GDP): 120.1%
Gross external debt: $225.24 billion ,2009 GDP (est): $187.6 billion
External debt per capita: $22,739
18. Australia - 138.9%External debt (as % of GDP): 138.9%
Gross external debt: $1.23 trillion 2010 GDP (est): $882.4 billion
External debt per capita: $57,641
17. Italy - 146.6%.External debt (as % of GDP): 146.6%
Gross external debt: $2.602 trillion ,2010 GDP (est): $1.77 trillion
External debt per capita: $44,760
16. Spain - 179.4%,External debt (as % of GDP): 179.4%
Gross external debt: $2.46 trillion ,2010 GDP (est): $1.37 trillion
External debt per capita: $60,614
15. Greece - 182.2%,External debt (as % of GDP): 182.2%
Gross external debt: $579.7 billion ,2010 GDP (est): $318.1 billion
External debt per capita: $53,984 14. Germany - 185.1%,External debt (as % of GDP): 185.1%
Gross external debt: $5.44 trillion ,2010 GDP (est): $2.94 trillion
External debt per capita: $51,572
13. Portugal - 223.6%,External debt (as % of GDP): 223.6%
Gross external debt: $552.23 billion ,2010 GDP (est): $247 billion
External debt per capita: $51,572
12. France - 250%,External debt (as % of GDP): 250%
Gross external debt: $5.37 trillion ,2010 GDP (est): $2.15 trillion
External debt per capita: $83,781
11. Hong Kong - 250.4%,External debt (as % of GDP): 250.4%
Gross external debt: $815.65 billion ,2010 GDP (est): $325.8 billion
External debt per capita: $115,612
10. Norway - 251%,External debt (as % of GDP): 251%
Gross external debt: $640.7 billion ,2010 GDP (est): $255.3 billion
External debt per capita: $137,476
9. Austria - 261.1%,External debt (as % of GDP): 261.1%
Gross external debt: $867.14 billion ,2010 GDP (est): $332 billion
External debt per capita: $105,616
8. Finland - 271.5%,External debt (as % of GDP): 271.5%
Gross external debt: $505.06 billion ,2010 GDP (est): $186 billion
External debt per capita: $96,197 7. Sweden - 282.2%,External debt (as % of GDP): 282.2%
Gross external debt: $1.001 trillion ,2010 GDP (est): $354.7 billion
External debt per capita: $110,479
6. Denmark - 310.4%,External debt (as % of GDP): 310.4%
Gross external debt: $626.1 billion ,2010 GDP (est): $201.7 billion
External debt per capita: $113,826
5. Belgium - 335.9%.External debt (as % of GDP): 335.9%
Gross external debt: $1.324 trillion ,2010 GDP (est): $394.3 billion
External debt per capita: $127,197
4. Netherlands - 376.3%,External debt (as % of GDP): 376.3%
Gross external debt: $2.55 trillion ,2010 GDP (est): $676.9 billion
External debt per capita: $152,380
3. Switzerland - 401.9%,External debt (as % of GDP): 401.9%
Gross external debt: $1.304 trillion ,2010 GDP (est): $324.5 billion
External debt per capita: $171,528
2. United Kingdom - 413.3%,External debt (as % of GDP): 413.3%
Gross external debt: $8.981 trillion ,2010 GDP (est): $2.173 trillion
External debt per capita: $146,953
1. Ireland - 1,382%,External debt (as % of GDP): 1,382%
Gross external debt: $2.38 trillion,2010 GDP (est): $172.3 billion
External debt per capita: $566,756 The US National debt is staggering: $11.896 trillion. There are widespread calls
inside and outside the United States to reduce the country's debt, fueled by fears
ranging from the rising tide of inflation to the possibility that the dollar will lose its
privileged position as the world's reserve currency.
But how bad is it, really?
There is no doubt that the US national debt is in dire straits and getting
increasingly out of control; ballooning over 100% since 2000, when it was a
mere $5.75 trillion. But despite steadily increasing debt levels, individuals and
countries around the world continue to maintain a high demand for US debt,
hinging their confidence on the strength of the American taxpayers and
government revenues generated by the country's economic activity.
On a surface level it may seem like the United States' debt position, the biggest
in the world, is also the worst. But when the numbers are looked at on a more
relative basis, the total amount of debt owed by the US, although still quite
high, seems more reasonable than that of other nations... at least for now.
One way to look at a nation's debt situation is by comparing external debt - the
combined total of liabilities, plus interest, that corporations, private citizens and
the government owe to entities outside their borders - to that country's GDP, a
comparison called the debt-to-GDP ratio. By comparing what a country owes to
what it produces, a picture forms of how likely or unlikely a country as a whole
will be to pay back its debt.
"External debt is more worrisome and important than public debt, as public debt
is generally recycled back into the economy," says Josh Bivens, Economist at
the Economic Policy Institute who has studied the long-term trends of national
debt positions. "With US government debt, a majority of interest payments go to
US citizens and money stays within the country. External debt represents pure
'leakage' out of the United States and is money that citizens will not have
because they've borrowed it in the past."
"External debt creates a much bigger hole than public debt," he adds, "for public debt it is hard to say which generation is being particularly harmed... but
for external debt, it is pretty clear cut; you're giving away future income to
support today's standard of living. You can't really say that about public debt."
But who should be concerned? Residents of the country, first and foremost, says
Bivens. A massive external debt could possibly trigger an exchange rate
devaluation, especially if a country relies heavily on imports, creating a
situation where money will be more difficult to tax in the future, debts will be
more difficult to repay with less valuable currency and issues of fiscal
sustainability arise.
However, there is really no single "danger" level for having too much external
debt as a percentage of GDP, and this depends much more on the country's
economic context. If a country has seen a rise in its debt compared to GDP
during a good economic expansion, this means something is really wrong and
policies will have to change, Bivens says.
Out of the world's 75 largest economies, the United States has the 20th largest
as debt-to-GDP ratio, standing at 94.3%, with a gross external debt of $13.454
trillion and an annual GDP $14.26 trillion. In fact, out of the largest 75
economies, this number is just above the worldwide average of 90.8% WesternEuropean and North American countries dominate the upper end of the
spectrum, with Switzerland (422%) and the United Kingdom (408%) at the #2
and #3 spots, respectively, and Ireland representing the most drastic debt-toGDP ratio. According to the most recent World Bank data, Ireland's number
stands at a staggering 1,267%.
So, relatively, the United States' debt isn't all that bad.
The current analysis was limited to the 75 largest economies in order to dismiss
outliers existing simply due to their size, as small countries like Monaco or
Luxembourg have disproportionate debt-to-GDP ratios of 1,850% and 4,910%
respectively. The first time this analysis was published on CNBC.com, it stirred angst from
Ireland over the numbers, as the country was a significant outlier in the final
data. A further breakdown of the country's external debt data, provided by the
World Bank, shows that a significant proportion of the country's external debt is
represented by the country's banking sector, accounting for approximately
$976.48 billion. The argument is that the country's International Financial
Services Center (IFSC) "lends almost nothing to the domestic Irish economy,"
according to the Irish Sunday Tribune.
However, to get a true apples-to-apples comparison, data from the World Bank
as well as external debt estimates by the US Government were used, numbers
which take into account this lending facility and any given country's banking
system as components of the overall debt number.
With the Irish government itself forecasting a contraction in GDP of 8.3%, the
debt-to-GDP ratio will likely continue to increase, even without additional
foreign investment. The biggest difference in these numbers, however, is that
the Irish taxpayers are only responsible (directly or indirectly, as in most
countries) for a portion of the debt responsibilities. But even if the banking
sector is removed from the total external debt number, Ireland would still have
a 748% debt-to-GDP ratio, keeping the country at the top spot.
Take into consideration another nation with a troubled debt-to-GDP ratio:
Iceland. According to the country's central bank, Iceland's external debt was
measured at $104.44 billion in Q2 2009. With a GDP of $10.46 billion, that's a
debt-to-GDP ratio of 998.5%. The Icelandic economy was the hardest hit out of
any in the financial crisis, and although the country's external debt was not
solely to blame, it had a major hand in the country's downward economic spiral,
and when combined with a dramatic drop in the value of its currency, resulted in
a near-government bankruptcy. In comparison, notable countries which have extremely low debt-to-GDP ratios
are Brazil (13%), Singapore (10.7%), China (4.7%) and India (4.6%), with the
lowest ratio boasted by Algeria, at 1.2%. Too low a ratio may not necessarily be
a good thing either, and could reflect a combination of lacked foreign
investment, low confidence in the nation's finances or the absence of debtfunded growth and investment policies by the national government. Bivens
points out that the tendency for emerging market economies to have low
external debt levels is counter-intuitive, as these are the places where marginal
investment is high, you should see net lending from rich countries to poor
countries, not the other way around.
Although the perspective of debt-to-GDP can be a revealing way to understand
the sustainability of a country's debt position, the future of a country's external
debt relies on both domestic economic policy and the ability of an economy to
attract foreign investments. The debate continues over whether there exists a
realistic way to pay off these rapidly increasing levels of government and
private debt, but one thing is clear: if we have learned anything from the global
economic crisis, the policy of taking on excessive debt cannot be perpetually
sustained, no matter the size of a debtor nation's domestic economy.
© 2011 CNBC.com
Sent by Mr. Murlidhar Chaturvedi saying ,compared to 22 nations compared in this document india is far better in external debt,if you belive CNBC
Anonymous said...There's the beauty of modern economics. Countries with ENORMOUS UN-servicable debts are Rich, of first world, blah..blah.. Whereas, countries that spend within limits are poor and third world. Great!!
I got to go, I need to borrow 10 bucks from my neighbor who borrowed 20 from me earlier!
I got to go, I need to borrow 10 bucks from my neighbor who borrowed 20 from me earlier!
Anonymous said...No really. you are top class if you have guns and can bomb the **** out of others. Might is right thats all. Another option to be world class is to have a militia population just like Swiss. Nobody even hitler dared to go in there. All have guns.
