No chance of payout. Top 5 countries with the highest public debt
As of mid-2016, seven states (among the largest countries) have a debt above 100% of GDP - Japan (211%), Italy (136%), Spain (100%), Belgium (109%), Singapore (108%), Greece ( 176%) and Portugal (129%) and two countries under 100% - the USA and France. Among developed countries, only Germany and Switzerland tend to reduce their debt burden. As for developing countries, the majority of public debt balances around 50%, with the exception of Brazil and Hungary with a debt of about 75%.
In the table, the horizontal color coding of the trend in government debt as a percentage of GDP over 15 years, where the transition from green to red means an increase. The last column is color-coded vertically, showing transitions from lowest to highest public debt.
There is no universal measure of the public debt limit, because for some countries 100% and above may be a normal level at which the state can easily service current obligations and make new borrowings, while for others 50% is a red line, a critical level.
From the point of view of the state and the ability to attract, the following factors influence:
- The degree of state control over the largest financial institutions in the national currency area.
- The capacity of the national financial system and developed debt instruments with mechanisms to modulate global cash flows in the right direction. Roughly speaking, the ability of the state to redirect the financial flows of institutional units from one instrument to another at a certain time with given criteria.
- Long-term confidence of institutional investors in the public debt market and the absence of negative experience in the circulation of debt securities.
- The international authority of the state and the ability to force, influence international investors, including foreign states.
- Developed monetary mechanisms to control excess liquidity in the system as part of the monetization of public debt. In other words, the ability of the Central Bank to buy back public debt without negative consequences in the financial markets, for the national currency and the economy.
- Presence of a stable surplus of operating cash flow among private entities.
In the US, it's the other way around. Having a shortage of national net cash flows that can be absorbed in public debt, the United States has methods of forcible coercion into the treasuries of international investors (if necessary, with the help of an aircraft carrier group, a coup d'état and panic in domestic markets). If this is not enough, then they buy up debt without any consequences through the Fed, backing up all this with propaganda about the absolute stability of treasuries.
Japan cannot coerce international investors like the US, but it has exceptional near-absolute control over national financial institutions, a large domestic market, and the ability to monetize without consequences.
Spain essentially has nothing and exists in the model of the core distribution of euro liquidity flows, in which Germany, Great Britain and France are in the first place, and what remains within the framework of loyalty and solidarity goes to the second, third group, and so on along the links of the food chain. Therefore, if the market conditions allow and there is an excess of liquidity, then Spain, Greece and Portugal get something. If not, then as in 2010-2012.
Dynamics of public debt to GDP in %
In this regard, speaking about the excess of public debt, it is necessary to imagine the potential of the state and the structure of the national financial system and the ability to both attract and service public debt.
For the last one:
- The amount of net interest expense relative to budget revenues and expenditures.
- The degree of coverage of the state debt by liquid funds of the state, the amount of net state debt.
- The normalized amount of government bond repayments to the total state debt and budget revenues.
- Current and potential need for net borrowing relative to total public debt and budget revenues.
The amount of public debt in billion dollars
The total debt of developed countries is about 44 trillion dollars, an increase over 15 years by almost 29 trillion, since the crisis of 2008 an increase of 15 trillion, however, in dollars, the growth of public debt of developed countries stopped in 2013, which is primarily due to the fall of national currencies against the dollar. 44-45 trillion is about 82% for all selected countries. In the group of developing countries, China occupies exactly half, and excluding the growth of China's public debt, the rest of the developing countries have practically not increased their dollar debt since 2011-2012.
In general, the overall debt situation is normalizing, both through a decrease in the need for new borrowings and a decrease in weighted average rates, which allows bringing the amount of debt servicing to the pre-crisis level. The US now pays less on its debt than in 2007, although the debt itself has grown from 8 to 18 trillion!
In all cases, we are talking about debt for the federal and municipal government.
New data on the public debt of the countries of the world in 2017 has been calculated. Given the uniqueness of the economy of each country, for a more objective comparison, public debt is compared with gross domestic product (GDP).
There are two types of public debt:
Current - the one that needs to be returned to foreign creditors in the current year, that is, in 2017. General state - accumulated over several years along with unpaid interest, it should be reimbursed in subsequent years.
To estimate the size of the public debt of a single state, specialists working in the field of economics and finance use the ratio between credit debt and the gross domestic product of the debtor country itself. In this case, GDP (gross domestic product) is a macroeconomic indicator representing the total amount of everything that a country has earned in a year from goods and services produced.
So, in 2016, Japan's public debt was about 248.1% of GDP. This means that in order to fully pay off the public debt, the entire population of the country must work for 2.5 years, completely abandoning the use of GDP for other purposes, such as their own consumption. In fact, new debt will arise during this period, since a complete abandonment of one's own consumption is impossible. On the other hand, Japan is, along with China, the largest creditor to the US. And in the mutual settlement, the position of Japan may be better than the United States.
It is worth noting that the US economy, in the presence of the largest public debt in the world and the largest GDP in the ratio, is only in 9th place.
Experts argue that public debt affects not only the economic sphere of the borrowing country, but can also lead to long-term political dependence. This is determined by the critical level of overall debt indicators.
The following are the values of public debt (gross, without counterclaims from other states) in relation to GDP. This does not take into account the obligations of states for pension insurance, medical insurance, healthcare and other types of financing. Including hidden debt.
World government debt 2017 as a percentage of GDP:
1 Japan - 250.91
2 Lebanon - 147.62
3 Italy - 131.71
4 Eritrea - 127.5
5 Portugal - 127.33
6 Cape Verde - 122.25
7 Bhutan - 122.12
8 Jamaica - 116.07
9 US - 107.48
10 Barbados - 106.58
11 Belgium - 106.52
12 Gambia - 99.24
13 Libya - 98.94
14 France - 98.84
15 Spain - 98.47
16 Singapore - 99.93
17 Maldives - 95.84
18 Cyprus - 95.32
19 Iraq - 95.22
20 Mauritania - 94.58
21 Sao Tome and Principe - 93.77
22 Ukraine - 92.31
23 Belize - 92.04
24 Bahrain - 92.01
25 Canada - 90.56
26 Croatia - 88.99
27 Egypt - 88.82
28 Antigua and Barbuda - 88.08
29 UK - 87.92
30 Saint Lucia - 87.87
31 Jordan - 87.45
32 Ireland - 84.6
33 Austria - 83.85
34 Mozambique - 82.02
35 Slovenia - 81.78
36 Saint Vincent and the Grenadines - 81.73
37 Dominica - 81.28
38 Brazil - 80.49
39 Grenada - 78.26
40 Serbia - 77.94
41 Montenegro - 76.99
42 Sri Lanka - 74.83
43 Hungary - 74.46
44 Kyrgyzstan - 73.52
45 Ghana - 72.21
46 Trinidad and Tobago - 69.4
47 Republic of the Congo - 68.99
48 Belarus - 68.89
49 Angola - 68.65
50 Albania - 67.77
51 Israel - 67.69
52 Bahamas - 67.56
53 Malawi - 67.45
54 Finland - 66.25
55 Laos - 66.11
56 Germany - 65.88
57 India - 65.56
58 Netherlands - 64.89
59 Vietnam - 64.82
60 Uruguay - 64.01
61 Morocco - 63.97
62 Pakistan - 63.66
63 Togo - 63.13
64 El Salvador - 61.79
65 Djibouti - 61.33
66 Argentina - 60.87
67 Malta - 60.78
68 Tunisia - 59.27
69 Ethiopia - 59.03
70 Zambia - 58.61
71 Lesotho - 58.5
72 Seychelles - 58.49
73 Yemen - 58.15
74 Puerto Rico - 57.7
75 Mauritius - 57.56
76 Samoa - 57.01
77 Qatar - 56.38
78 Senegal - 56.22
79 Saint Kitts and Nevis - 55.98
80 Malaysia - 54.96
81 Kenya - 54.96
82 Mexico - 54.89
83 Zimbabwe - 54.89
84 Tajikistan - 54.43
85 Guyana - 54.1
86 Poland - 52.85
87 Iceland - 52.63
88 Sudan - 52.43
89 Sierra Leone - 52.14
90 Central African Republic - 52.11
91 Republic of South Africa - 52.11
92 Slovakia - 51.89
93 Honduras - 49.76
94 Gabon - 49.52
95 China - 49.32
96 Armenia - 48.93
97 Bolivia - 48.28
98 Colombia - 47.99
99 Niger - 47.85
100 Denmark - 47.73
175 Russia - 19.43
Russia's external debt to other countries for 2017-2018
Financial experts have calculated that according to the results of the last quarter of 2017, Russia's external debt is 537.5 billion US dollars. But at the same time, they reassure that even such an amount will not be able to lead our country to default, although some companies risk going bankrupt.
Russia's most significant debt is to the US and EU states. Experts specify that in 2017 payments on Russia's external debt amounted to $12.5 billion. Due to devaluation (depreciation of the national currency), the total debt increases, although debts are constantly paid. In 2018, almost all budget funds will be spent on paying off external public debt. In this regard, Russian business will face a decrease in income (as a result, a reduction in jobs, a decrease in tax deductions, and an increase in the share of imports).
Russia is gradually changing its status: from a debtor to a creditor. According to financial reports, the position of the private sector in terms of external assets equaled the liabilities. The problem remains with balancing the budget of our country, which, as you know, is based on the price policy of oil in rubles.
Belarus must pay $23.5 billion of public debt by 2025
In 2019-2025, Belarus plans to allocate $23.46 billion to service and repay external and domestic public debt. Such data of the Ministry of Finance are given in the prospectus for the issue of Eurobonds, which the Belarusian authorities placed in the first quarter.
Payments on external public debt should amount to $19.1 billion, on domestic - $4.36 billion.
At the same time, in 2019-2023, payments on public debt will amount to 18.5 billion dollars: in 2019 - 3.6 billion, in 2020 - 3.78, in 2021 - 3.54, in 2022 - 3 ,6, in 2023 - almost 4 billion dollars.
In 2024-2025, domestic and foreign government debt payments are expected to drop to $2.59 and $2.36 billion, respectively.
“Based on all the parameters, we can say that the public debt is sustainable, but at the same time it acts as a very significant burden for the country in terms of the annual burden of servicing and repaying the public debt. In the medium term, we estimate annual payments on the public debt at the level of $3.5 billion - this is a large amount for the country's economy," First Deputy Finance Minister Maksim Yermolovich stressed earlier, answering journalists' questions.
In turn, Alexander Lukashenko set a task for the economic authorities to solve the debt problem. “The main challenge that the government and the National Bank have to cope with in the coming years is to “outgrow” the debt burden and enter the safety zone. For future generations, we must leave Belarus debt-free,” the official leader said in his annual address to the people and parliament in April.
According to the Ministry of Finance, in 2018 $3.6 billion will be allocated to repay and service the public debt, including $2.4 billion from non-debt sources.
The debt-to-GDP ratio compares a country's sovereign debt to its total economic output in a year. Its output is measured by gross domestic product.
This ratio is a useful tool for investors, leaders and economists. This allows them to assess a country's ability to repay its debt. A high ratio means that the country is not generating sufficient funds to pay off its debt. A low ratio means that there is a lot of economic output available to make payments.
If a country were a household, GDP is like its income. Banks will give you more credit if you make more money. Similarly, investors will be happy to take on a country's debt if it grows more. Once investors start worrying about repayment, they will demand a higher interest rate for a higher default risk. This increases the cost of the country's debt. This could quickly become a debt crisis.
Tipping point
What is a tipping point? A World Bank study found that if the debt-to-GDP ratio exceeds 77 percent for an extended period of time, it slows down economic growth. Each percentage point of debt above this level costs the country 1.7 percent in economic growth.
This is even worse for emerging markets. There, each additional percentage point of debt above 64 percent will slowly rise by 2 percent each year.
How to use the debt-to-GDP ratio
The debt-to-GDP ratio allows investors in government bonds to compare debt levels across countries.
For example, Germany's debt is $2. 7 trillion, which is half that of Greece, which is 514 billion dollars. But Germany's GDP is $3. 8 trillion, which is much more than Greece's 281 billion. This is why Germany (the largest country in the EU) should have bailed out Greece, and not the other way around. The debt-to-GDP ratio for Germany is 72% and for Greece it is 182%.
So, is the debt-to-GDP ratio a good predictor of which country will default? Not always. Japan's debt-to-GDP ratio is 228 percent. Japan is not in danger of default since most of its debt is owned by its own citizens. Many Greek debts were held by foreign governments and banks. Since Greece's credit notes became mandatory, its debt was downgraded by rating agencies such as Standard & Poor's, which led to higher interest rates. Greece had to find a way to increase income, as well as cut spending and increase taxes. This further slowed the economy , which further reduced income and contributed to debt repayment.
US debt to GDP ratio is 104%. But this is not critical for a country that can issue debt in its own currency. The United States can simply print more dollars to pay off the debt. For this reason, the risk of default is very low. On the other hand, debt holders end up with money that is worth less. This will eventually force them to avoid US debt.
As a country's debt-to-GDP ratio rises, it often signals that a recession is continuing. This is because the country's GDP is shrinking as a result of the recession. This causes taxes and federal revenues to fall at the same time that the government spends more on stimulating its economy.
If stimulus spending is successful, the recession will subside, taxes (and federal revenues) will rise, and the debt-to-GDP ratio should level off.
The best determinant of investor confidence in a government's solvency is its debt yield. When the yield is low, it means there is a lot of demand for its debt. He does not have to pay with high returns. The United States is fortunate in this regard. During the Great Recession, investors fled to US debt. It is considered ultra safe.
As the global economy continues to improve, investors will be comfortable with higher risk because they want higher returns. US debt yields will rise as demand falls. When the yield is high, pay attention. This means that investors do not want debt. The country has to pay more to get them to buy their bonds.
This creates a downward spiral. High interest rates make it more costly for the country. This increases government spending, which creates a larger budget deficit, which creates more debt. A good example is the Greek debt crisis.
That is why the ratio of debt to GDP for all its types is still widely used. This is a good rule of thumb for how strong a country's economy is and how likely it is to use good faith to pay down debt.
How to Calculate the Debt to GDP Ratio
To determine the debt-to-GDP ratio, you need to know two things: a country's debt level and a country's economic performance. It seems pretty simple until you learn that debt is measured in two ways. Most analysts look at total debt. Some, like the CIA World Factbook, only look at the public debt.
This is a little misleading. In the United States, all debt essentially belongs to the public. That's why. The US Treasury has two categories. Publicly disclosed debt consists of US Treasury bonds or US Savings Bank bonds held by individual investors, companies, and foreign governments. Public debt is also owned by pension funds, mutual funds, and local governments.
Another category is intragovernmental holdings. This is a category not reported on by the CIA World Factbook because it is a debt that the federal government owes to itself and not to external creditors. The CIA shows that the government will not extinguish itself, so what? This is just a method of accounting between two agencies.
But it matters a lot. The money that the federal government "owes itself" is largely due primarily to the Social Security Trust Fund and the federal department's pension funds. Thanks to the Baby Boomer generation, these agencies are getting more payroll tax revenue than they are now, they have to pay benefits. This means they have excess money that they use to buy Treasuries. The government is just spending extra money on all government programs. When the Boomers retire, Social Security will pay cash in their treasury holdings to pay benefits.
Therefore, you should always look at the total debt, not just the debt to society. This is because all federal debt is ultimately owed to the public. This is why intra-government holdings must be counted in the U.S. debt-to-GDP ratio.
Frequently Asked Questions on Debt to GDP
- What is the difference between real and nominal GDP?
- What are the components of GDP?
- What is the best way to compare GDP between countries?
- What is the difference between GDP and GDP growth rate?
- What is the ideal growth rate?
- What is the current GDP growth rate?
- What is depression?
The public, or national, debt of the United States is the amount that America owes to its creditors. The US has the largest public debt in the world.
Public debt of individual countries of the world
General information about the US government debt
At the moment, the national debt of the United States has exceeded the mark of 22 trillion dollars. The amount is huge and psychologically difficult for ordinary Americans to perceive, especially since it is constantly and rapidly growing. The US Department of the Treasury monitors changes in public debt. The US national debt has the following structure:
- 27% - intra-government debt to various state-owned companies (a pension fund, for example);
- 33% - public debt to various individuals and banks;
- 40% - debt to foreign creditors.
U.S. government borrowing ratio table (August 2019 data)
The country | State loan, billion$ | Government loan, % |
China | 1110 | 16,8 |
Japan | 1100 | 16,7 |
Great Britain | 640 | 9,7 |
Brazil | 306 | 4,6 |
Ireland | 271 | 4,1 |
Switzerland | 231 | 3,5 |
Luxembourg | 230 | 3,5 |
Cayman islands | 216 | 3,3 |
Hong Kong | 206 | 3,1 |
Belgium | 191 | 2,9 |
Saudi Arabia | 177 | 2,7 |
Taiwan | 171 | 2,6 |
India | 155 | 2,4 |
Singapore | 140 | 2,1 |
France | 125 | 1,9 |
South Korea | 115 | 1,8 |
Other countries | 1206 | 18,3 |
Total debt to foreign countries | 6590 | 100 |
China and Japan are the largest holders of US government bonds totaling $2 trillion 210 billion. The average yield on all securities they own is 2.6% per annum. Russia has reduced the amount of American securities in its assets, and today it has invested only $14 billion in the US economy.
The United States backs its public debt with securities issued by the Treasury. Anyone can buy them at one of three hundred annual auctions. Bonds, although the least profitable, but the most reliable securities, because. backed by state property and assets.
US Treasury Securities:
- Bills of exchange are the most unpopular, because their validity period is less than a year, and therefore the interest rate on them is the lowest.
- Medium-term bonds for a period of one to 10 years with an interest rate of 0.3 to 2.6% per annum.
- Long-term bonds operate from 10 to 30 years and have a yield of 3.2% per annum.
- Treasury securities at 3.2% per annum and for a period of 30 years are the most reliable, because for them the state additionally pays amounts that compensate for inflation.
US national debt and other economic indicators
However, it is incorrect to consider only public debt figures without reference to other indicators. If we compare debt with gross domestic product, then this is 110% of total GDP, which is actually not the largest figure. For example, Japan's public debt is more than 200% of GDP, and its economy is one of the five strongest in the world.
The ratio of public debt to GDP of individual countries in %
wdt_ID | The country | Public debt to GDP, % |
---|---|---|
1 | Japan | 235 |
2 | Greece | 191 |
3 | Sudan | 176 |
4 | Venezuela | 162 |
5 | Lebanon | 161 |
6 | Italy | 128 |
7 | Barbados | 127 |
8 | Portugal | 117 |
9 | USA | 110 |
10 | Singapore | 109 |
Speaking about the public debt, the recalculation of the external debt of the state per population of the country is indicative. Every US citizen owes over $67,470. For comparison: for Africans it is only 60-100 dollars per person, and in Switzerland 27 thousand in US currency.
Change in the US national debt in the 20th century
The national debt of the American state did not arise yesterday. The US has been running a budget deficit since the 1960s. and forced to borrow from private lenders and foreign governments.
Table of changes in US public debt
Year | Public debt, billion $ | Year | Public debt, billion $ |
1910 | 2 | 1990 | 3206 |
1920 | 26 | 2000 | 5628 |
1930 | 16 | 2010 | 13528 |
1940 | 50 | 2015 | 18627 |
1950 | 256 | 2016 | 19949 |
1960 | 290 | 2017 | 20164 |
1970 | 380 | 2018 | 21408 |
1980 | 909 | 2019 | 22571 |
The percentage of America's public debt to its GDP peaked in 1946 at 121%. This situation was the result of the huge military spending of the power during the Second World War. Further dynamic development of the country's economy made it possible to reduce this figure to 36% by the beginning of the 1980s. However, then the growth of public debt was already much faster than economic growth. Huge injections into the military-industrial complex and participation in several armed conflicts (Iraq, Syria, Yemen) also played a big role here. Therefore, by 2012, the volume of public debt again exceeded 100% of GDP. Today this figure is 110%.
In 2016 then-US presidential candidate Donald Trump promised to reduce the size of the national debt within 8 years. However, during his tenure in power, the country's public debt increased by 10%.
Experts say that in the future the US public debt will grow steadily. But in America there is a law according to which the loans of the government of the country are limited to the so-called debt ceiling. Today, the US can borrow for any amount up to September 2019, the public debt figure for that day will be considered the ceiling. Most likely, the United States authorities will solve the problem traditionally - by raising the ceiling of their public debt.
Why is America credited?
There are a combination of factors at work here.
- The United States has been the most economically developed power in the world for over a century. The whole world consumes products produced in this country. Oil refining, biochemistry, pharmaceuticals, machine and aircraft building, energy, high technology, entertainment and service areas are actively developing, and with them, GDP is growing by an average of 3% per year.
- The United States is the birthplace of many of the world's most famous companies, whose capitalization more than covers the national debt of the country. For example, the combined capitalization of only six US companies Facebook, Alphabet, Microsoft, Amazon, Apple and Berkshire Hathaway is $3,400 billion, equal to the US debt to Japan and China. And these are only 6 enterprises out of 30, whose capitalization exceeds $100 billion.
The capitalization of only 6 US companies covers the total US debt to Japan and China.
- The USA is one of the most visited countries by tourists. About 70 million people a year come here to see New York, Washington, Las Vegas and Disneyland.
- Interest rates on loans in the USA are among the lowest, and the inflation rate is only 2%, which makes this country very attractive for everyone who wants to start a business abroad. Every year the population of the American States increases by 1.2 million people, and it should be noted that not only residents of South America come here. A huge number of entrepreneurs move to the States in order to invest in the economy of their new country of residence.
- People go to America and get an education, one of the best and highly rated in all countries of the world. And foreigners are ready to pay a lot of money for this education.
- Recently, the United States has been actively returning its production from Asian countries to their homeland. Now it is more profitable to build a high-tech automatic plant, which will be serviced by only a few engineers, on its own territory, where energy is inexpensive and tax rates are preferential, than to keep a huge staff of workers on the other side of the world, whose labor is no longer the cheapest.
- Agriculture is also quite profitable in this country. In terms of grain exports, the United States occupies a leading position in the world. Deliveries of semi-finished products from poultry also go to many foreign countries.
- Not to mention the music and film industry, which no one can overtake.
- The US government debt is calculated in that country's currency. The dollar is the most popular currency in the world, which is most often used for money transactions.
It is a mistake to think that a large external debt of the state is bad. Lending rules at the international level do not differ from the issuance of loans to individuals. It is much easier to get borrowed funds for those countries that have a strong economy, rich mineral resources, a high standard of living and a favorable investment environment. Such borrowers are guaranteed to return the funds invested in bonds, and all interest due to the lender. The worse the situation in the country, the more cautious the attitude of creditors towards it. The United States has the highest public debt, however, the economy of this state is one of the most stable and strong in the world, so there is little doubt that the country will fulfill its obligations to creditors.
The people of America themselves are ambivalent about the debts of their government. Naturally, many of them are afraid of a situation in which the need to pay the public debt will result in an increase in taxes and tariffs, a reduction in wages and social benefits. But there are those who are sure that they will not have to repay their debts at all, because. no country in the world would go into conflict with such a strong military power.
What is the US spending so much money on?
Speaking of a country's public debt, it is important to consider what its government spends such huge funds on. America's top spending items are:
- The medicine. About 1.1 trillion dollars is spent on various programs in this area:
- medical care for citizens with certain diseases, as well as pensioners over 65;
- qualified assistance to the poor.
- Financial support and social protection programs for pensioners and the disabled. About 1 trillion dollars is allocated for such events.
- Defense. America spends 1.3 trillion dollars on the defense of its territory and participation in various military operations abroad.
- Other significant expenses: public transport, education, international politics.
Raising funds through external loans is a fairly common practice among state economic institutions. Foreign capital serves to improve the financial performance of the state, while forming the country's external debt. International borrowing can both improve the economy of a single state, and lead it to serious problems and cause a crisis. Public debt affects the size of civil taxes and is one of the reasons for the slowdown in economic development.
What is external debt
Attracting borrowed funds from private and state structures of foreign citizenship leads to the accumulation of debt obligations of the state in question. Funds can be used for various purposes, including to normalize the state of the domestic economic climate. Funds, private investors, banks, etc. can act as sources of funds.The formation of external public debt (ie borrowing) is carried out through operations in the debt market or through direct loans. Federal loan bonds (Russia) or other securities of a similar type are considered the main instruments for raising capital by the state. The size of the public debt is a dynamic value calculated by adding up all the credit obligations of the country.
A positive aspect of international financial resources is the increase in liquidity, leading to increased consumer activity and industrial growth. The funds raised can be used to refinance the country's external public debt, that is, repay previous loans. Social and budgetary programs can also be financed from funds raised through external channels.
Servicing external debt is one of the main factors slowing down the growth of the GDP indicator, since the funds allocated to pay off the debt and interest on it are withdrawn from the total volume of state capital.
The main types of external debt
External borrowings have typical and periodic differences, which determine:- corporate external debt - financial obligations of economic entities performing certain activities within the state. Both private companies and public companies are taken into account. This type is taken into account when determining the total amount of the country's external public debt, but does not impose financial obligations directly on the state, except in the case of state guarantees and security;
- public external debt - a set of obligations assumed by municipal and federal government agencies, including guarantees for private and corporate loans;
- current public debt - obligations, the execution of which is limited to a period of 12 months;
- national debt - the totality of all obligations, the execution of which is scheduled both for the current period and for the future.
Short-term loans, characterized by high interest rates and narrow time frames, are considered less profitable for the state. Often the borrower resorts to extension and consolidation, as well as other contractual concessions on the part of the lender. Thus, it is short-term loans that can make up a large part of the country's external public debt and exert significant pressure on the economy and personal financial well-being of citizens.
It is not difficult to distinguish between the two presented concepts; public debt is understood as the total (cumulative) debt of the state to creditors operating in the domestic and foreign markets. When determining the size of a country's public debt, funds borrowed by the state itself are not taken into account. Indebtedness to state institutions does not affect the reported indicators of public debt.Accordingly, the external public debt is an integral part of the public debt as a whole. This concept combines debt and obligations to pay interest taken by the state in favor of foreign financial institutions. Organizations such as:
- IBRD;
- EBRD;
- AVF, etc.
Organizations such as the Arab Monetary Fund or the EBRD have similar functionality and capabilities, but operate in a smaller area limited by national, economic interests. Mention should be made of informal structures that solve financial issues at the global level, without having the status of an international financial organization.
These include the London and Paris clubs, the first was created by banks, the second unites the governments of countries with the most developed economies. In private, club meetings may decide the fate of the country's internal or external debt, on terms that suit the parties or one of the parties to the meeting. Mandatory compliance of the terms of the transaction with the universal principles of morality is not guaranteed.
Public debt has a negative impact on the overall situation of the financial and economic system of the state. The presence of leverage on the unique economic characteristics and features of market competitors implies significant limitations in terms of the systemic development of the state. A number of reasons have been identified that make the external debt of the state the most burdensome, among them:- access of foreign structures to preferential prices for the debtor's resources;
- high interest, requiring payment by any means, including reserve;
- the possibility of infringement of some rights of the country of the borrower;
- downgrading of the main ratings of a country with a significant external debt.
At the moment when the borrower's economy reaches certain "bottoms", the international fund offers its own specialist to advise the debtor's leading economic managers who allowed the existing problems to arise. In addition, external public debt has a direct impact on the budget, provoking the emergence of a deficit. The lack of capital in the economy makes new borrowing a necessity.
The population of a country that has fallen into a "debt vicious circle" feels price pressure and is forced to pay at inflated tax rates, as well as buy expensive products. The next step of the government will be the devaluation of the national currency, as a rule, this is what international experts working under the government under a loan contract recommend. Such a situation creates a dangerous social situation, mass riots of citizens who have lost the opportunity to live their former lives may begin in the country.
Countries with the smallest external debt
Characteristic indicators of external public debt
Estimated analysis of the credit burden will be incomplete without indicating the values of external debt. It is this indicator that contributes to understanding the general well-being of the studied economy. The stability and degree of investment dependence of the sovereign economy are another indicators viewed through the prism of external credit obligations. The Ministry of Finance uses the information obtained from the analysis to model further economic scenarios and determine the state economic course.There are two main indicators that determine the characteristics of entire groups of data, these indicators determine the residuals and dynamics (flows). Important in calculating the size of a country's external debt are solvency ratios reflecting such aspects as:
- the volume of debt in relation to GDP;
- balance of the volume of export profit to payments on loan interest (in %);
- stability indicator - indicates the degree of potential risk associated with loan repayments;
- liquidity and ability to pay.
Debt servicing is handled by administration and monitoring experts. The system performs regulatory functions affecting such issues as: the amount of debt and its thresholds, the conditions for providing funds and the development of methods to reduce the debt burden by paying off the debt or restructuring it.
With proper regulation, problems can be solved in the following areas:
- limiting the debt burden;
- reducing the cost of borrowing;
- increase in guarantees for the fulfillment of obligations undertaken.
The methods used include managing the duration of the loan agreement, restructuring the external public debt and switching to more profitable programs, etc. There are three main debt repayment systems: financial - works from the implementation of projects and obtaining additional profit; budget - fulfillment of debt obligations at the expense of the state budget. A combination system may also be used.
Debt calculations are most often carried out in US dollars; it is acceptable to use the national currency or one of the currencies formed by the total external debt. To obtain more accurate indicators, a percentage system is used. At the moment, the United States economy has the largest debt, the country owes more than $14.59 trillion to creditors. The total value of world external debt exceeds $54 trillion, which is exactly how much countries owe to funds and other international creditors.
List of countries by external debt
Place in the world | Percentage of debt to GDP |
|
---|---|---|
1 | Japan | 250.91 |
2 | Lebanon | 147.62 |
3 | Italy | 131.71 |
4 | Eritrea | 127.5 |
5 | Portugal | 127.33 |
6 | Cape Verde | 122.25 |
7 | Butane | 122.12 |
8 | Jamaica | 116.07 |
9 | USA | 107.48 |
10 | Barbados | 106.58 |
11 | Belgium | 106.52 |
12 | Gambia | 99.24 |
13 | Libya | 98.94 |
14 | France | 98.84 |
15 | Spain | 98.47 |
16 | Singapore | 97.93 |
17 | Maldives | 95.84 |
18 | Cyprus | 95.32 |
19 | Iraq | 95.22 |
20 | Mauritania | 94.58 |
21 | Sao Tome and Principe | 93.77 |
22 | Ukraine | 92.31 |
23 | Belize | 92.04 |
24 | Bahrain | 92.01 |
25 | Canada | 90.56 |
26 | Croatia | 88.99 |
27 | Egypt | 88.82 |
28 | Antigua and Barbuda | 88.08 |
29 | Great Britain | 87.92 |
30 | Saint Lucia | 87.87 |
31 | Jordan | 87.45 |
32 | Ireland | 84.6 |
33 | Austria | 83.85 |
34 | Mozambique | 82.02 |
35 | Slovenia | 81.78 |
36 | Saint Vincent and the Grenadines | 81.73 |
37 | Dominica | 81.28 |
38 | Brazil | 80.49 |
39 | Grenada | 78.26 |
40 | Serbia | 77.94 |
41 | Montenegro | 76.99 |
42 | Sri Lanka | 74.83 |
43 | Hungary | 74.46 |
44 | Kyrgyzstan | 73.52 |
45 | Ghana | 72.21 |
46 | Trinidad and Tobago | 69.4 |
47 | Republic of the Congo | 68.99 |
48 | Belarus | 68.89 |
49 | Angola | 68.65 |
50 | Albania | 67.77 |
51 | Israel | 67.69 |
52 | Bahamas | 67.56 |
53 | Malawi | 67.45 |
54 | Finland | 66.25 |
55 | Laos | 66.11 |
56 | Germany | 65.88 |
57 | India | 65.56 |
58 | Netherlands | 64.89 |
59 | Vietnam | 64.82 |
60 | Uruguay | 64.01 |
61 | Morocco | 63.97 |
62 | Pakistan | 63.66 |
63 | Togo | 63.13 |
64 | Salvador | 61.79 |
65 | Djibouti | 61.33 |
66 | Argentina | 60.87 |
67 | Malta | 60.78 |
68 | Tunisia | 59.27 |
69 | Ethiopia | 59.03 |
70 | Zambia | 58.61 |
71 | Lesotho | 58.5 |
72 | Seychelles | 58.49 |
73 | Yemen | 58.15 |
74 | Puerto Rico | 57.7 |
75 | Mauritius | 57.56 |
76 | Samoa | 57.01 |
77 | Qatar | 56.38 |
78 | Senegal | 56.22 |
79 | Saint Kitts and Nevis | 55.98 |
80 | Malaysia | 54.96 |
81 | Kenya | 54.96 |
82 | Mexico | 54.89 |
83 | Zimbabwe | 54.89 |
84 | Tajikistan | 54.43 |
85 | Guyana | 54.1 |
86 | Poland | 52.85 |
87 | Iceland | 52.63 |
88 | Sudan | 52.43 |
89 | Sierra Leone | 52.14 |
90 | Central African Republic | 52.11 |
91 | Republic of South Africa | 52.11 |
92 | Slovakia | 51.89 |
93 | Honduras | 49.76 |
94 | Gabon | 49.52 |
95 | China | 49.32 |
96 | Armenia | 48.93 |
97 | Bolivia | 48.28 |
98 | Colombia | 47.99 |
99 | Niger | 47.85 |
100 | Denmark | 47.73 |
101 | Liberia | 47.65 |
102 | Costa Rica | 47.34 |
103 | Guinea-Bissau | 45.83 |
104 | Moldova | 45.02 |
105 | Guinea | 44.71 |
106 | Bosnia and Herzegovina | 44.5 |
107 | Thailand | 44.49 |
108 | Fiji | 44.18 |
109 | Switzerland | 44.12 |
110 | Azerbaijan | 43.8 |
111 | Rwanda | 43.27 |
112 | Suriname | 43.07 |
113 | Papua New Guinea | 42.71 |
114 | Tanzania | 42.58 |
115 | Sweden | 41.9 |
116 | Oman | 41.7 |
117 | Lithuania | 41.42 |
118 | Cameroon | 41.33 |
119 | Czech | 40.97 |
120 | Benin | 40.63 |
121 | Romania | 40.21 |
122 | Uganda | 40.16 |
123 | Australia | 39.96 |
124 | Macedonia | 39.67 |
125 | Georgia | 38.77 |
126 | Chad | 38.46 |
127 | Madagascar | 38.11 |
128 | Ecuador | 37.89 |
129 | Vanuatu | 37.79 |
130 | South Korea | 37.45 |
131 | Panama | 37.41 |
132 | Taiwan | 37.3 |
133 | Burundi | 36.96 |
134 | Republic of Haiti | 36.21 |
135 | Mali | 36.07 |
136 | Dominican Republic | 35.85 |
137 | Latvia | 34.67 |
138 | Bangladesh | 34.18 |
139 | Philippines | 33.79 |
140 | Tuvalu | 33.32 |
141 | Burkina Faso | 33.01 |
142 | Cambodia | 33.01 |
143 | Marshall Islands | 32.5 |
144 | Myanmar | 32.24 |
145 | Nicaragua | 32.16 |
146 | Namibia | 31.82 |
147 | Ivory Coast | 31.47 |
148 | Bulgaria | 30.62 |
149 | South Sudan | 30.47 |
150 | Comoros | 29.59 |
151 | Nepal | 29.45 |
152 | Turkey | 29.2 |
153 | New Zealand | 29.02 |
154 | Indonesia | 28.4 |
155 | Norway | 27.94 |
156 | Paraguay | 27.28 |
157 | Equatorial Guinea | 27.25 |
158 | Venezuela | 27.13 |
159 | Saudi Arabia | 25.77 |
160 | Peru | 25.48 |
161 | micronesia | 25.25 |
162 | Turkmenistan | 24.54 |
163 | Algeria | 24.45 |
164 | Kosovo | 24.36 |
165 | Guatemala | 24.28 |
166 | Swaziland | 22.77 |
167 | Chile | 22.51 |
168 | Democratic Republic of the Congo | 22.18 |
169 | Luxembourg | 22.13 |
170 | Kuwait | 22.08 |
171 | San Marino | 21.57 |
172 | Kiribati | 20.77 |
173 | Kazakhstan | 20.46 |
174 | United Arab Emirates | 19.71 |
175 | Russia | 19.43 |
176 | Iran | 17.71 |
177 | Uzbekistan | 15.19 |
178 | Nigeria | 13.98 |
179 | Botswana | 11.83 |
180 | Solomon islands | 10.07 |
181 | Estonia | 9.16 |
182 | Afghanistan | 8.01 |
183 | Brunei | 3.52 |
184 | Hong Kong | 0.06 |
185 | Macau | 0 |