Who Has The Most Debt In The World

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Tokyo’s famous Shibuya Crossing. Japan is the third largest economy in the world but also has the highest debt ratio. (Credit: James Matsumoto/SOPA Images/LightRocket via Getty Images)

Of all countries, Japan (center) has the highest debt burden. And the least? Hong Kong (outer ring, top). (Image credit: Visual Capitalist: Visualizing the Global Debt Situation by Country)

Who Has The Most Debt In The World

Rutherford B. Hayes knew a thing or two about loans. As the 19th President of the United States, he spent most of his single term (1877-81) dealing with the massive financial crisis caused by the Civil War a decade earlier, when the national debt rose to a phenomenal 4,000%. And as a result of some over-ambitious real estate investments, Hayes also had some personal knowledge of loans.

Visualizing The State Of Global Debt, By Country

It has not been a pleasant experience. On July 13, 1879, almost in the middle of his presidency, he said in his newspaper: “Let every person, every business and especially every village, town and city, country and state be and remain debt-free. He who is destroyed by hard times is a debtor.”

That visceral dislike apparently did not rub off on Hayes’ successors. The US national debt is currently over $30 trillion. Most economists argue that the corresponding figure is the public debt, which amounts to a much smaller $23.5 trillion. In any case, the United States has an absolutely dubious reputation for having the largest national debt in the world. To put this number into perspective, that’s a deal for just over $90,000 per person.

There are a few other ways to break this onion. The standard measure of government debt is expressed as a percentage of gross domestic product (GDP), which is the market value of all goods and services that a country produces in a year. That’s what this infographic does. Ranked in eight circles (just one less than Dante’s Inferno), countries are ranked by debt-to-GDP ratio. One of the first things that strikes us is that debt is not discrimination. Both developed and developing countries, from the nearly debt-free outer rings to the debt-ridden center of the map, blend inexorably at both ends of the scale.

But the center, the middle circle, is obviously only one country: Japan. The world’s third largest economy (nominal GDP in 2020 is just over $5 trillion) has a debt-to-GDP ratio of 256%. This means that Japan’s national debt is more than two and a half times its total annual economic output. It’s a very long line of Toyotas.

Chart: The Most Indebted Countries Over Time

In 2010, Japan became the first country to exceed 200 percent. No other country has accumulated as much debt, at least in relative terms, but Japan has since been followed over that symbolic threshold by two other countries: Sudan (209.9%) and Greece (206.7%).

Completing the rest of the second circle (138%-210%) are three smaller developing countries (Cape Verde, Suriname and Barbados) and one large developing country: Italy (154.8%), which has the ninth largest economy in the world. . , which is 2.4% of global GDP.

Fourteen countries fill the third circle (109% to 138%), including some of the world’s largest economies: Canada (109.9%), France (115.8%), Spain (120.2%), and the United States (133.4%). ), whose debt ratio according to this chart is just below that of Mozambique. According to the U.S. Debt Debt The US debt ratio is only 128% of GDP. But it’s the same: The country owes its creditors about 1.3 times the total goods and services produced in the United States in a year.

The fourth circle (83%-109%) includes 24 countries, including the last member of the G7, Great Britain (108.5%), as well as the first group of 15 countries whose debt ratio is below 100% of GDP. These include mature economies such as Austria (84.2%) and emerging economies such as Ghana (83.5%).

Chart: The Countries With The Largest National Debt Burdens

As the circles widen, the debt ratios decrease, from Pakistan (83.4%) to Panama (62.2%) in the fifth circle, and from Armenia (62.2%) to the African Republic. Average (46.5%) in fifth place. sixth . The outer periphery consists of countries with debt ratios ranging from 46.1% of GDP (the Pacific island nation of Vanuatu) to a paltry 2.1% (Hong Kong – if still considered separate). It is worth mentioning that China ranks fifth with 68.9%.

So since debt seems to have nothing to do with countries’ economic prosperity – Germany and Gabon are fellow debtors, both with debt ratios around 72% – what’s with high public debt?

Rutherford B. Hayes, perhaps the president with the longest beard and certainly one of the staunchest opponents of the national debt. (Source: Stock Montage / Getty Images)

While debt is not the same for nations and individuals, one thing remains true: debt is accumulating, and must be paid. As debt increases, so does the risk of countries failing, which can lead to all kinds of financial turmoil, including panic and very real hardship for citizens.

Infographic: The Countries That Own The Most U.s. Debt

The issue of debt is especially relevant in times of Covid-19. It will be a long time before the pandemic ends before the debts that have been accumulated by governments to keep wages up, businesses afloat and economies from collapsing are repaid.

Many economists are wary of debt and see deficit spending (ie spending more than you earn and making up the difference in debt) as a good way to increase economic growth. Rutherford B. Hayes would probably disagree and have a little something or two to say about it in his journal.

The growing field of geopsychology suggests that the Big Five personality traits vary by region. But not all results fit the stereotype. In fact, if you currently have a US Treasury bond or T-bill in your portfolio, you are already a US government borrower.

And as you can see in today’s HowMuch.net chart, foreign countries like China and Japan can also build large positions in US Treasuries, making them significant players in the total US debt.

Debt In World Economies

As you can see, about $8.1 trillion in debt is held by US government agencies or the Federal Reserve. That number would include securities held in federal employee retirement accounts, Social Security trust funds, or any of the Treasuries on the Fed’s balance sheet.

Another $7.6 trillion in debt is held by domestic investors. These are marketable securities held by banks, mutual funds, pension funds, insurance companies, and other investors.

While domestic debt is generally unattractive, the $6.3 trillion in debt held by foreign countries is a bigger question. After all, might a country like China not “weaponize” its large holders of government debt in retaliation in an ongoing trade war?

China has been hoarding government bonds for decades as part of its strategy to prevent its currency from appreciating. Interestingly, the export-heavy nation has reduced its government bonds in recent months, selling nearly $200 billion of them.

Global Debt Is More Than $300 Trillion. Why Does It Matter?

Although China still has $1.11 trillion in government bonds in reserves, the general consensus is that dumping them all at once would destabilize the global financial system and have an equally negative impact on China.

While it’s not surprising to see countries like China, Japan or Brazil on the list with the largest foreign debt holders, what do places like the Cayman Islands, Luxembourg or Ireland make the list?

First, despite a population of only 60,000 people, the Cayman Islands are a hedge fund capital with over 10,000 funds based there. Luxembourg is on the list for similar reasons, being the equivalent of European tax protection.

On the other hand, Ireland is home to many US tech giants such as Facebook or Alphabet. Apparently these companies like to keep their overseas earnings in highly liquid government bonds, rather than paying repatriation taxes to bring the money back to American soil.

Global Debt Reaches A Record $226 Trillion

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In May 2022, South Asian country Sri Lanka was defeated for the first time. The country’s government did not pay interest on the $78 million for 30 days when the grace period was granted, but in the end it was unpaid.

Not only does this affect Sri Lanka’s economic future, but it also raises an important question: which other countries are in the dark?

World Debt Comparison: The Global Debt Clock

Ukraine has a heightened privacy risk due to its ongoing conflict with Russia. To understand why, imagine a scenario where Russia should take over the country. If this happens, Ukraine’s current debts may never be repaid.

This scenario led to a sell-off of Ukrainian government bonds, pushing their value to almost 30 cents on the dollar.

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