Global Debt 2025 – Top 10 Countries with Highest Debt-to-GDP Ratio

IN NEWS: Global Debt 2025 – Top 10 Countries with Highest Debt-to-GDP Ratio

ANALYSIS

• Context:
  According to the latest WION report (October 2025), the global debt-to-GDP ratio has risen to 94.7% from 92.4% in 2024, marking a continued increase in global indebtedness relative to economic output. Although this remains below the pandemic peak of 98.7% in 2020, it signals persistent fiscal pressures across both developed and developing economies.
• Key Highlights:
  The IMF and related financial institutions attribute this rising global debt level to factors such as prolonged fiscal stimulus, geopolitical tensions, and post-pandemic recovery expenditures.
• Top 10 Countries with Highest Debt-to-GDP Ratios (2025):
  1. Japan – 230%
     • Highest in the world.
     • Driven by decades of fiscal stimulus, ageing demographics, and persistent low growth.
  2. Sudan – 222%
     • Result of colonial legacy, civil conflict, and economic instability.
     • Chronic debt trap due to weak governance and protracted crises.
  3. Singapore – 176%
     • Unique case: high debt but zero net debt since financial assets exceed liabilities.
     • Debt largely reflects domestic deposits rather than fiscal deficits.
  4. Venezuela – 164%
     • Driven by social spending, economic mismanagement, and dependence on oil.
     • Sanctions have worsened fiscal conditions.
  5. Lebanon – 164%
     • Marked by political instability, economic collapse, and humanitarian crisis.
     • Ongoing efforts to implement reforms post-government restructuring.
  6. Greece – 147%
     • Continues recovery from Eurozone debt crisis (2010s).
     • Despite reforms, structural debt remains high as per IMF projections.
  7. Bahrain – 143%
     • Prolonged fiscal deficits but gradual improvement due to economic diversification.
     • Non-oil sector now forms 85% of GDP (Q1 2025) compared to 55% in 2002.
  8. Italy – 137%
     • Among the highest in Eurozone.
     • Tax evasion, debt-driven welfare spending, and political populism have kept debt high.
  9. Maldives – 132%
     • Faces public debt crisis despite tourism recovery.
     • IMF warns of default risk amid structural vulnerabilities.
  10. Mozambique – 131%
      • Burdened by public debt, insurgency, and humanitarian distress.
      • IMF projects continued fiscal stress in 2025.
• Global Implications:
  • Rising global debt levels constrain fiscal flexibility and increase default risks.
  • High-debt economies face interest burden pressures and inflationary concerns.
  • Emerging economies are particularly vulnerable to external shocks and capital outflows.

STATIC PART / BACKGROUND

• Debt-to-GDP Ratio:
  • Measures a country’s total debt compared to its annual economic output.
  • Formula: (Total Debt ÷ GDP) × 100.
  • A high ratio may indicate financial stress or overreliance on borrowing.
• International Monetary Fund (IMF):
  • Established in 1944 at the Bretton Woods Conference.
  • Aims to ensure global monetary cooperation, exchange rate stability, and fiscal discipline.
  • Publishes the World Economic Outlook (WEO) and Fiscal Monitor reports that track global debt trends.
• Post-Pandemic Fiscal Dynamics:
  • Many economies increased borrowing during COVID-19 to support public health and stimulus programs.
  • Rising interest rates have now made debt servicing costlier, raising sustainability concerns.

Updated – 28 October 2025 ; 04:48 PM | News Source: WION