Public debt: which are the seven most indebted countries in the world?

Which countries have the highest public debt? Find out the ranking and where Italy ranks.

Public debt is one parameter that describes a country’s economic situation. It is often mentioned everywhere, with another measure, GDP, which indicates a state’s total productive assets.

But which are the most indebted states, and thus, which is the ranking of the countries with the highest public debt?

Public debt: a problem to be tackled

The ranking of countries by public debt has changed since the COVID-19 pandemic, not so much by the order of the states in the ranking but by the amount of money they owe their creditors. In 2028, according to the International Monetary Fund (IMF), the global debt-to-GDP ratio will reach 100%. This indicator, usually used to analyse the economic situation of an individual state, measures the amount of debt concerning the Gross Domestic Product (GDP), i.e. the total productive assets of a state, over a year.

If the low ratio, GDP is sufficient to repay the annual debt. If, on the other hand, the ratio represents a large gap between debt and GDP, it will mean that production is not enough to repay the debts, and more will have to be demanded, increasing the ratio even further.

The situation is even more severe if we consider the quantitative tightening policies all central Western governments implement to combat inflation. Rising interest rates contribute to increasing government debt costs. If that were not enough, the outbreak of conflict in the Middle East could increase energy and fuel costs and, consequently, government spending. So, what is the ranking of the countries with the highest public debt?

The ranking of the most indebted countries

The countries with the highest public debt are ranked using the debt-to-GDP ratio. The nominal value of this measure taken ‘alone ‘needs to provide information on the real incidence of a state’s debts.

1. Japan (258.2%)

The country with the highest debt-to-GDP ratio is Japan. The causes of the country’s high debt are to be found in the housing bubble that burst in the 1990s.

2. Greece (166%)

Greece’s avoided default in 2009 is now a distant memory; the country has certainly improved in recent years. In the second quarter of 2023, it was the second fastest-growing country in Europe.

3. Sudan (151.1%)

Third in the ranking of countries in terms of public debt is Sudan, which has been severely affected by an economic crisis caused by internal conflicts. This has resulted in policies of international isolation negatively influenced by corruption.

4. Eritrea (146.3%)

Eritrea is a dictatorship headed by unelected President Isaias Afewerki. In the African state, the authoritarian government has implemented laws that severely restrict civil and political rights. In addition, it imposes long-term compulsory military and civil service, which forces many citizens to flee.

5. Italy (141.7%)

Our country ranks fifth among the most indebted countries. The Italian public debt reached a new all-time high in February 2023 and, after a slight decline in August, has been rising again since September.

6. Laos (123%)

The high ratio of public debt to GDP in Laos is mainly caused by the country’s structural challenges of macroeconomic instability. Despite this, however, the situation could improve as tourism in the country is expected to pick up again.

7. USA (122.2%)

Seventh on the list of the most indebted countries is the United States, which, like Italy, is pursuing quantitative tightening policies to combat inflation. One of the weak points of these policies is debt. As interest rates rise, so do the states’ liabilities.

Now that you know the ranking of the most indebted countries, you can delve deeper by reading our dedicated Academy article. This starts with a simple definition and then deals with the history of Italy’s public debt.