Unveiling the Countries with the Highest National Debt in 2024 and the Factors Affecting Their Financial Landscapes
Japan’s Total Debt Growth Rate
As of 2023, Japan’s total debt accounted for 1,291.0% of the country’s GDP. This figure represents a slight decrease from the previous quarter’s ratio of 1,298.7%. The data reached an all-time high of 1,339.6% in June 2022 and a record low of 892.0% in June 1998. The total debt includes liabilities of financial corporations, non-financial corporations, the general government, households, and non-profit institutions serving households (NPISH) sectors.
Factors Affecting Japan’s National Debt
Aging Population
Japan’s demographic structure, with a rapidly aging population, has led to increased social security costs. This demographic shift results in a smaller workforce, lower tax revenues, and higher government spending on healthcare and pensions.
Economic Stagnation
Weak economic growth has been a persistent issue for Japan, especially since the asset price bubble burst in the early 1990s. The lack of robust economic activity translates into lower tax revenues, which exacerbates the debt situation.
Government Spending
In response to economic challenges, Japan has engaged in significant government spending to stimulate growth. This includes infrastructure projects, bailouts, and other fiscal stimulus measures.
Low Interest Rates
The Bank of Japan has maintained low interest rates for an extended period, which encourages borrowing but also means that savings generate little return. This policy is part of Japan’s aggressive monetary policy aimed at combating deflation.
Natural Disasters
Japan has faced costs associated with natural disasters, such as the 2011 earthquake and tsunami, which require substantial government spending for recovery and rebuilding efforts.
COVID-19 Pandemic
The global pandemic has led to increased government spending to support the economy during lockdowns and to provide stimulus packages to businesses and individuals affected by the crisis.
Public Debt Management
Despite the high debt-to-GDP ratio, Japan has managed its debt through domestic financing and long-term bonds, which has helped avoid a debt crisis. The majority of Japan’s debt is held by Japanese entities, including the central bank, financial institutions, and individuals, which provides a level of stability.
Venezuela’s Total Debt Growth Rate
In 2023, Venezuela’s national debt to its gross domestic product (GDP) declined to 148.23%. This marked a decrease from the significantly higher ratios recorded in the preceding years. The decline suggests a shift in the country’s debt trajectory, although it remains high by international standards.
Factors Influencing Venezuela’s National Debt
Economic Policies and Management
- Commodities Boom: The public debt increased after 2007, partly due to the consumption boom triggered by the commodities super-cycle.
- Expropriation Policies: Nonfinancial debt escalated because of expropriation policies and contractual breaches, especially by Petróleos de Venezuela, S.A. (PDVSA).
Political Challenges
- Parliamentary Control: The 2015 National Assembly election created an obstacle when the government ignored parliamentary controls over debt.
- Debt Repayment: Despite suggestions of a possible default, the Maduro government continued repaying the debt, denying default and exacerbating the economic collapse.
U.S. Sanctions
- Financial Pressure: In August 2017, the U.S. government extended sanctions against new PDVSA debt and government bonds, contributing to the financial pressure on Venezuela.
Economic Collapse
- GDP Contraction: The economy contracted by approximately 75% since 2013, a decline unprecedented for a peacetime economy.
- Hyperinflation: Venezuela has experienced hyperinflation, leading to a deeply depreciated national currency and economic instability.
Oil Industry Decline
- Production Drop: The oil industry, once the backbone of Venezuela’s economy, has seen production fall to historic lows.
- Revenue Loss: Oil revenues, which historically represented a significant portion of Venezuela’s GDP and foreign exchange earnings, have drastically reduced.
Humanitarian Crisis
- Mass Exodus: Over five million Venezuelans have fled the country, creating a refugee crisis in the region.
- Healthcare System: The healthcare system is overstretched, with critical shortages of medical supplies and personnel.
Debt Restructuring Prospects
- Failing State: Venezuela shows many signs of a failing state, with a collapsing economy and a political system in stalemate.
- Restructuring Needs: There is a pressing need for restructuring sovereign debt to rebuild the national economy.
Sudan’s Total Debt Growth Rate
In 2024, Sudan’s national debt was forecasted to continuously increase between 2024 and 2029 by a total of 1.4 trillion U.S. dollars, representing a 253.43 percent increase. This substantial growth rate reflects the country’s ongoing economic difficulties and the need for comprehensive debt management strategies.
Factors Affecting Sudan’s National Debt
Economic Adjustments Post-Secession
The secession of South Sudan in 2011 resulted in a significant loss of oil production, exports, and fiscal revenues for Sudan. The country lost about 75 percent of its oil production and half of its fiscal revenues, which has had a lasting impact on its economy.
Sanctions and International Relations
Sudan has faced challenges in attracting external investment due to its designation on the U.S. list of state sponsors of terrorism. This has hindered progress toward clearing large arrears and moving towards debt relief under the Heavily Indebted Poor Countries (HIPC) initiative.
Economic Contraction and Inflation
Sudan’s economy has experienced contraction and high inflation rates. The currency devaluation and loose fiscal and monetary policies have contributed to a challenging macroeconomic environment.
Humanitarian Situation
The humanitarian situation in Sudan remains dire, with large numbers of internally displaced people and refugees. This adds to the strain on the country’s resources and complicates efforts to achieve economic stability.
Debt Relief Efforts
Sudan has been deemed eligible for debt relief under the Enhanced Heavily Indebted Poor Countries (HIPC) initiative, which is a critical step in addressing its unsustainable debt burden. The country’s debt was reduced from about US$56 billion to US$28 billion, marking progress in its debt management efforts.
Political and Economic Reforms
The transitional government has embarked on reforms to address macroeconomic imbalances and lay the groundwork for inclusive growth.
Greece’s Total Debt Growth Rate
The total debt growth rate of Greece has seen fluctuations over the years. In 2024, the general government debt is expected to decline significantly from 171.3% of GDP in 2022 to 159.3% in 2023 and further to 152.2% in 2024. This reduction is a positive sign, indicating that Greece is making progress in managing its debt levels.
Factors Affecting Greece’s National Debt
Economic Policies and Fiscal Management
- Fiscal Mismanagement: Chronic fiscal mismanagement has been a significant factor, with Greece historically spending beyond its means.
- Weak Revenue Collection: The country has struggled with weak revenue collection, exacerbating its fiscal deficits.
- Structural Rigidities: Structural rigidities in the Greek economy have made it difficult to adjust to economic shocks and to implement reforms efficiently.
Eurozone Membership
- Lack of Monetary Policy Flexibility: As a member of the Eurozone, Greece does not have control over its monetary policy, which limits its ability to devalue its currency and regain competitiveness.
- Maastricht Criteria: Greece’s entry into the Eurozone was marred by controversy, as it was later revealed that the country had misrepresented its finances to meet the Maastricht criteria.
Global Financial Crisis
- Great Recession Impact: The global financial crisis exacerbated Greece’s debt situation, leading to a severe recession and a sharp decline in GDP.
Austerity Measures
- Bailout Conditions: The bailout packages from the European Union (EU) and the International Monetary Fund (IMF) came with stringent austerity measures, which led to public unrest and further economic contraction.
Recovery Efforts
- Economic Reforms: Greece has implemented numerous economic reforms aimed at restoring fiscal stability and encouraging growth.
- Debt Restructuring: The country has engaged in debt restructuring to extend maturities and reduce the burden of debt repayments.
Investment and Growth
- National Recovery and Resilience Plan: Investment is expected to continue to expand with the implementation of the National Recovery and Resilience Plan supported by Next Generation EU funds.
- Banking System Resilience: The banking system has shown resilience, with asset quality improving and the Non-Performing Loan ratio declining below 5 percent in systemically important banks
Singapore’s Total Debt Growth Rate
In 2023, Singapore’s government debt accounted for 170.8% of the country’s Nominal GDP. This was an increase from the previous quarter’s ratio of 167.6%. The data reached an all-time high of 170.8% in December 2023, indicating a growing trend in the debt-to-GDP ratio.
Factors Influencing Singapore’s National Debt
Strategic Government Borrowing
Singapore’s government borrows not to fund expenditures but to invest for the future. The proceeds from these borrowings are invested by the government’s investment arm, GIC Private Limited, which manages Singapore’s foreign reserves. This strategic approach aims to generate long-term returns that exceed the cost of borrowing.
Asset-Rich Government
Despite the high gross debt figures, Singapore remains a net creditor nation. The government’s assets, including cash, shares, debentures, and bonds, significantly outweigh its liabilities. This results in a net debt-to-GDP ratio of 0%, reflecting the country’s strong financial position.
Prudent Fiscal Management
Singapore has a reputation for prudent fiscal management, with a strong emphasis on maintaining a balanced budget over the medium term. The government’s conservative approach to spending and commitment to generating surpluses has contributed to its AAA credit rating.
Economic Resilience
Singapore’s economy is known for its resilience and ability to adapt to global economic changes. The country’s strategic location, business-friendly environment, and skilled workforce have attracted significant foreign investment and contributed to economic growth.
External Debt Composition
Singapore’s external debts are mainly deposits kept in Singapore banks by overseas banks and depositors. These deposits become part of Singapore’s external assets when borrowers take up loans, contributing to the country’s strong external position.
Consolidated Fiscal Balance
In December 2023, Singapore registered a consolidated fiscal balance surplus equal to 1.5% of its Nominal GDP. This surplus indicates the government’s ability to manage its finances effectively and maintain a healthy fiscal balance