The popular notion is that countries in debt are the poor and underdeveloped nations of Africa and Asia, while the main creditors are the ones with developed economies in Europe and North America. This may be true in some regards but you will be surprised that the list includes some of the more advanced countries in the world.
In looking at the countries most in debt, what should be taken into account is the percentage of the debt compared to the country’s gross domestic product, or GDP. Only public debt is counted as well, so those owed by private companies and institutions are not included in the percentage level.
A high level of debt does not necessarily spell doom. A lot of times, it is actually needed to keep the economy humming properly, like in the cases of Japan and Singapore. Sometimes, the debt level will pile up quickly especially when a country is trying to stay afloat in a midst of a crisis, like Spain and Greece, both of which bore the brunt of the financial troubles in Europe. Of course, the only problem is that it would take years before a country gets to pay off a mountain of debt. The keys are to keep supporting growth even as the debt is being paid off and the introduction of sound policies to address structural problems.
So here now is a list of the top 10 countries most in debt based on their respective debt to GDP ratios.
10. Singapore – 118.2 percent
Singapore is the fourth leading financial center in the world, the second biggest casino gambling market, the largest oil rig producer, one of the three largest oil refining centers in the world, one of the five busiest ports in the world and a major repairer of ships. It has also been named as one of the easiest place to do business in the world. It is also the top logistics hub in the world and the fourth largest foreign exchange trading center. With all these credentials, it is easy to see why analysts are not alarmed of the country’s high debt to GDP ratio.
9. Italy – 120.9 percent
Italy is called the sick man of Europe because of its stagnant economy, unstable political scene and inadequate reform programs. There is a lack of infrastructure development and research investment. It also does not have enough raw materials and energy resources, with the country importing as much as 86 percent of its requirements. There is also a high level of corruption and heavy taxation. There is also a significant inequality in income between the northern and southern parts of the country. Up to now, Italy still receives development assistance from the European Union.
8. Jamaica – 126.5 percent
Jamaica was actually experiencing significant growth until 2006. The GDP was growing, unemployment rate was declining and the tourism, mining and service sectors were vastly improving. However, the global downturn in the latter part of the decade took its toll on the country’s economy. Until 2009, Jamaica’s economy declined. The government introduced an aggressive debt management initiative designed to control the struggling economy to some degrees of success, though its debt to GDP ratio still remains over 100 percent.
7. Antigua and Barbuda – 130 percent
The country is heavily dependent on tourism. This means that when a recession or economic downturn happens in the developed countries, it would heavily affect Antigua and Barbuda as well. This is what happened during the recent crisis as the drop in tourist arrivals squeezed the country into a tight corner economically. The country has also been hard pressed to be self sufficient in agriculture because of a limited water supply and labor shortage.
6. Iceland – 130.1 percent
One of the most economically advanced countries in the world, the country suffered a crisis in 2008 that led to the suspension of banks. Progress has been made, however, and the country now has a generally sustainable fiscal policy. Monetary policies need to be improved to control inflation.
5. Lebanon – 137.1 percent
The economy has actually grown, though it still faces challenges as a result of its huge public debt and external financing needs. These have been slowing down the economy and limiting the government’s spending on essential infrastructure projects.
4. Greece – 165.3 percent
Greece hid their borrowings to enable them to meet EU deficit targets. It also led to massive spending way beyond their means. There was a confidence crisis on Greece’s ability to pay off its debt. The EU had to bail out the country with billions of euros in order to prevent the economy from totally collapsing.
3. Saint Kitts and Nevis – 200 percent
The main industries of the country are agriculture, tourism, export-oriented manufacturing and offshore banking. Tourism has been continuously expanding, with the number rising by more than 40 percent in a two-year period from 2007 to 2009. The country has also introduced a citizenship by investment program to encourage foreigners to put in their money in Saint Kitts and Nevis.
2. Japan – 208.2 percent
Japan has the third largest economy in the world, ranking only after the United States and China. The global recession and financial crisis of 2009 hit the country hard, however, forcing the country to borrow. Further exacerbating the problem was the deadly earthquake, tsunami and nuclear fallout in 2011. Their sovereign debt rating has been cut because of these. Still, the country is in good position to recover because of its large industrial capacity. It is home to some of the most technologically advanced companies in the world.
1. Zimbabwe – 230.8 percent
Zimbabwe faced a variety of economic problems the last decade because of corruption and mismanagement, as well as the introduction of controversial social measures like the forcible eviction of white farmers and the land redistribution measure in 2000. Tourism also fell sharply because of the 60 percent drop of the country’s wildlife from 2000 to 2007 due to poaching and deforestation. There was also massive hyperinflation that reached 11.2 million percent in 2008. It forced the country to introduce a $100 billion note and even a $100 trillion bill. The economy has been slowly recovering since the introduction of a new unity government.