Is the national debt important? Is this a sign of financial security? Not all of the time.
According to the IMF database, there is only one “debt-free” country. The relatively low national debt of many countries could be owing to a failure to present true data to the IMF.
Another situation in which a low national debt is a poor omen is when a country’s economy is so weak that no one wants to lend to them.
The ten least indebted countries in the world in 2020, according to IMF data:
What countries owe no debt?
- The National Debt, as Eric Stone points out, is owing to the financial markets, which lend credit that they produce themselves. Furthermore, they leverage the “gilt-edged” status of government bonds as security to produce up to 9 times more credit, which they then lend to the general people and businesses. In 2013, the UK paid more than £40 billion in interest, which was paid out of our taxes. When you consider that the Chancellor announced today that he intends to cut another £25 billion from spending, you might assume that he might save the interest that we shouldn’t have to pay. Jersey and Guernsey, for example, have no national debt and hence pay no interest. All of this began during the Napoleonic Wars, when the government took out loans to pay the conflict. Income tax was imposed to pay for interest, but the capital has continued to increase unabated. Trading in those bonds at the time of the Battle of Waterloo gave the Rothschild family a fortune, and they became the UK government’s largest creditor. Since then, Lord Rothschild’s family has continued to wield power in government, the Treasury, and the Bank of England. Debt-based money is the most serious problem and, in many ways, the root of our current predicament.
Which country is most in debt?
What countries have the world’s largest debt? The top 10 countries with the largest national debt are listed below:
With a population of 127,185,332, Japan holds the world’s biggest national debt, accounting for 234.18 percent of GDP, followed by Greece (181.78 percent). The national debt of Japan is presently $1,028 trillion ($9.087 trillion USD). After Japan’s stock market plummeted, the government bailed out banks and insurance businesses by providing low-interest loans. After a period of time, banking institutions had to be consolidated and nationalized, and other fiscal stimulus measures were implemented to help the faltering economy get back on track. Unfortunately, these initiatives resulted in a massive increase in Japan’s debt.
The national debt of China now stands at 54.44 percent of GDP, up from 41.54 percent in 2014. China’s national debt currently stands at more than 38 trillion yuan ($5 trillion USD). According to a 2015 assessment by the International Monetary Fund, China’s debt is comparatively modest, and many economists have rejected concerns about the debt’s size, both overall and in relation to China’s GDP. With a population of 1,415,045,928 people, China currently possesses the world’s greatest economy and population.
At 19.48 percent of GDP, Russia has one of the lowest debt ratios in the world. Russia is the world’s tenth least indebted country. The overall debt of Russia is currently about 14 billion y ($216 billion USD). The majority of Russia’s external debt is held by private companies.
The national debt of Canada is currently 83.81 percent of GDP. The national debt of Canada is presently over $1.2 trillion CAD ($925 billion USD). Following the 1990s, Canada’s debt decreased gradually until 2010, when it began to rise again.
Germany’s debt to GDP ratio is at 59.81 percent. The entire debt of Germany is estimated to be around 2.291 trillion € ($2.527 trillion USD). Germany has the largest economy in Europe.
Is it possible for a country to have no debt?
Question from a reader: Is it conceivable for a country to pay off its whole national debt?
Yes. A country with a large tax base (such as the oil-rich Middle East) could simply run a budget surplus and buy back any prior government bonds.
It’s likely that people will prefer to keep their bonds rather than sell them to the government because they offer to pay a guaranteed interest rate. In that event, the government would have to wait until the bonds’ terms of 10, 20, or 30 years expired before acting.
Liberia, according to the CIA Factbook, has the lowest national debt as a percentage of GDP, at 3.3 percent.
Paying down the national debt has the drawback of virtually eliminating the country’s bond market. People with money would be unable to purchase government bonds, which are a safe investment. It may entice local savers to look outside and purchase bonds in other nations, resulting in a money outflow.
Maintaining a budget surplus for an extended period of time may also dampen aggregate demand. The government is effectively pulling money from the monetary system’s circular flow.
The countries with the lowest national debt as a percentage of GDP are not necessarily the ones with the highest living standards.
Which country is the richest in the world?
China surpasses the United States to become the world’s richest country. China’s wealth has risen to $120 trillion from $7 trillion in 2000, a staggering increase from the country’s days before joining the World Trade Organization.
How much debt is the world in 2021?
In the second quarter, debt as a percentage of GDP declined to roughly 353 percent, down from a peak of 362 percent in the first three months of this year.
According to the IIF, 51 of the 61 nations it studied had their debt-to-GDP ratios fall, owing to a significant recovery in economic activity.
However, it cautioned that the recovery has not been robust enough in many cases to bring debt ratios down below pre-pandemic levels.
Only five nations, according to the IIF, have overall debt-to-GDP ratios that are lower than pre-pandemic levels: Mexico, Argentina, Denmark, Ireland, and Lebanon.
China’s debt levels have risen faster than those of other countries, while emerging-market debt excluding China hit a new high of $36 trillion in the second quarter, primarily to increased government borrowing.
After a minor reduction in the first quarter, debt in developed economies, particularly the eurozone, climbed again in the second quarter, according to the IIF.
Although household debt climbed at a record rate, debt creation in the United States was the slowest since the start of the crisis, at roughly $490 billion.
In the first half of this year, global household debt increased by $1.5 trillion to $55 trillion. In the first half of the year, roughly a third of the nations studied by the IIF experienced an increase in household debt, according to the IIF.
“In practically every major country in the globe, rising housing prices have accompanied increased household debt,” said Tiftik of the IIF.
According to the IIF, total sustainable debt issuance has topped $800 billion this year, with global issuance expected to reach $1.2 trillion in 2021.
Why is Japan debt so high?
The Japanese public debt is anticipated to reach around US$13.11 trillion (1.4 quadrillion yen) as of 2021, the most of any developed country at 266 percent of GDP. The Bank of Japan holds 45 percent of this debt.
The collapse of Japan’s asset price bubble in 1991 ushered in a long period of economic stagnation known as the “lost decade,” with real GDP decreasing considerably during the 1990s. As a result, in the early 2000s, the Bank of Japan embarked on a non-traditional strategy of quantitative easing to inject liquidity into the market in order to promote economic growth. By 2013, Japan’s public debt had surpassed one quadrillion yen (US$10.46 trillion), more than twice the country’s yearly gross domestic product and already the world’s highest debt ratio.
Japan’s public debt has continued to climb in response to a number of issues, including the Global Financial Crisis in 2007-08, the Tsunami in 2011, and the COVID-19 epidemic, which began in late 2019 and has consequences for Tokyo’s hosting of the 2020 Summer Olympics. In August 2011, Moody’s downgraded Japan’s long-term sovereign debt rating from Aa2 to Aa3 due to the country’s large deficit and high borrowing levels. The ratings drop was influenced by substantial budget deficits and government debt since the global recession of 2008-09, as well as the Tohoku earthquake and tsunami in March 2011. The Yearbook of the Organisation for Economic Co-operation and Development (OECD) noted in 2012 that Japan’s “debt surged above 200 percent of GDP partially as a result of the devastating earthquake and subsequent reconstruction efforts.” Because of the growing debt, former Prime Minister Naoto Kan labeled the issue “urgent.”
Does China have debt?
7.0 trillion dollars), or around 45 percent of GDP. Chinese local governments may have an additional CN 40 trillion ($5.8 trillion) in off-balance sheet debt, according to Standard & Poor’s Global Ratings. According to the International Monetary Fund, debt owed by state-owned industrial businesses accounts for another 74 percent of GDP. A additional 29 percent of GDP is owed by the three government-owned banks (China Development Bank, Agricultural Development Bank of China, and Exim Bank of China). China’s high debt level is a contemporary economic issue.
Can someone buy a country?
Now that I was an educated and mature adult, I wanted to explore if my childhood dreams were indeed as irrational as I had assumed. As a result, I decided to do some research.
A country, it appears, cannot be purchased. There is a list of billionaires who can afford one, but who precisely are they purchasing the country from? What exactly does it mean to purchase a country? Are you the president or prime minister, and do you make laws, or do you simply possess a large amount of land? The point is that acquiring a large sum of money and then offering it to a country in need of funds is essentially a pipe dream.
There are various options to build your own country if you are dedicated to the dream. Purchasing islands is a very serious possibility. Belize, for example, has a number of islands for sale, some for less than a house and as low as $200,000. You might build your own micro-nation after obtaining your island. Sealand, a micronation near the United Kingdom, is actively seeking a buyer.
What happens if a country Cannot pay its debt?
The federal government of the United States is rated AAA by the majority of credit rating agencies, the highest possible rating. If the debt is not paid, the country’s credit rating will be automatically downgraded, raising interest rates for all Americans. As private lenders are obliged to raise their interest rates, small business loans will become more expensive. Even SBA-guaranteed loans, which are generally less expensive and easier to obtain but still reflect market conditions, will grow more expensive.
Does Singapore have debt?
The money we borrow under the Government Securities Act is not spent. As a result, all loan proceeds are invested. Our external obligations, being one of the world’s premier financial centers, are mostly deposits held in Singapore banks by foreign banks and depositors. Singapore has no net debt at all.
How much is the Philippine debt?
This demonstrates a willingness to put up with high debt levels in the short run. As the state ran large deficits to combat the epidemic, outstanding government debt increased from 8.2 trillion pesos in 2019 to 10.2 trillion pesos in 2020. The federal debt has risen to 11.9 trillion pesos in the first three quarters of 2021. Despite not knowing the final figures for 2021, the government intends to borrow another 7.5 percent of GDP in 2022 to fund public spending. That, in my opinion, illustrates that Philippine policymakers are not afraid of capital markets punishing them for excessive borrowing. They clearly believe that counter-cyclical public spending is more vital at this moment to stimulate the economy.
Because, unlike Thailand, the Philippines’ current account swung into surplus during the epidemic, the Philippines may feel comfortable running deficits right now. The trade deficit shrank, while foreign remittances from Filipinos living abroad remained stable, implying that the current account will be stronger in 2022 than it was before the pandemic. Because a current account surplus often equals cheaper borrowing costs, this affords Manila some leeway to run deficits. According to the Department of Budget Management, the surplus will remain at 1.5 percent of GDP in 2022, and foreign exchange reserves will rise to $117 billion.
This is one of the reasons why the 2022 budget expects debt servicing costs to fall even as spending and total debt levels rise — borrowing costs are likely to remain reasonable for the time being. That might not last indefinitely (especially if the US Federal Reserve raises interest rates soon), which is why it’s critical that any money the Philippines borrows to finance its deficits is spent on things that matter. Infrastructure and education will receive a large portion of investment in 2022, although health and other social services may not have received as much funding as some would like. These are the concerns that will be debated in the Senate before the bill is passed.
But, for the time being, the most important point is that, in 2022, this administration will try to spend its way out of any remaining economic effects of the epidemic, and it will not be hesitant to run deficits or take on debt to do so. If the current account returns to deficit and borrowing costs rise, this newfound debt tolerance may evaporate quickly, and I’m sure policymakers in the Philippines will be watching this closely in the months and years ahead.
