Martin Lee @ Sg
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World’s Biggest Debtor Nations

Recently, there had been growing concerns over sovereign debts after Dubai stunned the world by announcing a need for a temporary debt repayment freeze.

S&P said that Spain will experience a “more prolonged period of economic weakness” than anticipated at the start of 2009 and has cut its AA+ debt rating outlook from stable to negative.

Portugal’s outlook was also revised to “negative” from “stable” by S&P while Greece had its credit ratings was reduced one step to BBB+ by Fitch Ratings and S&P.

world debtA measure of a nation’s foreign liabilities, capital plus interest that the government and institutions within a nation’s borders must eventually pay is their external debt. This number includes not only government debt, but also debt owed by corporations and individuals to entities outside their home country.

One way of comparison is by looking at the percentage of each nation’s external debt to its GDP. CNBC did a study two months ago and compiled a list using numbers provided from the World Bank.

Here is the list of the largest nation debtors out of the world’s largest 75 economies:

Country Name, Gross External Debt, GDP, percentage of external debt vs GDP

  1. Ireland – 2.386tr, 188.4b, 1267%
  2. Switzerland – 1.338tr, 316.7b, 422.7%
  3. UK – 9.087tr, 2.226tr, 408.3%
  4. Netherlands – 2.452tr, 672b, 365%
  5. Belgium – 1.246tr, 389b, 320.2%
  6. Denmark – 607.38b, 203.6b, 298.3%
  7. Austria – 832.4b, 329.5b, 252.6%
  8. France – 5.021tr, 2.128tr, 236%
  9. Portugal  – 507b, 236.5b, 214.4%
  10. Hong Kong – 631.13b, 306.6b, 205.8%
  11. Norway – 548.1b, 275.4b, 199%
  12. Sweden – 669.1b, 344.3b, 194.3%
  13. Finland – 364.85b, 193.5b, 188.5%
  14. Germany – 5.208tr, 2.918tr, 178.5%
  15. Spain – 2.409tr, 1.403tr, 171.7%
  16. Greece – 552.8b, 343b, 161.1%
  17. Italy – 2.31tr, 1.823tr, 126.7%
  18. Australia – 891.26b, 800.2b, 111.3%
  19. Hungary – 207.92b, 196.6b, 105.7%
  20. US – 13.454tr, 14.26tr, 94.3%

While US has the largest external debt, it is only ranked 20th while comparing it to GDP.

Iceland has a percentage of 999% while among the low ratios, Singapore, China and India have percentages of 10.7%, 4.7% and 4.6% respectively.

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3 comments
Singaporean says 9 years ago

A more accurate picture of how financially independent a country is will have to include its loans as well. For example, if Country A loans out to most countries and is itself in debt with just one country is going to be very different from a country which did not lend to any country yet is in debt from many countries.

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Singaporean says 9 years ago

Hmm, looks like China and India borrowed the least money. I wonder whether it is a deliberate decision on their part or they cannot find willing lenders. A question that came to my mind is who are the ones lending when most of the countries borrow more than what they make. If we can use money lent out to cancel money borrowed then perhaps the percentage would not seem so high?

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    lioninvestor says 9 years ago

    Yes, the figures are based on gross debt, so there will be cross debts across the different nations.

    If you think of each country like a company, a country will be in a trade deficit position if it imports more than it exports. If the flow of investment capital into the country is not enough to make up for it, then it will be in negative cashflow position and will have to fund the deficit using debt or external debt.

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