Countries with the Highest Debt: Top 10 Debt-Ridden Countries

Top Ten Countries with the Highest Debt in the World

We often opt for a loan not just to make our purchases but to boost our finances. The same thing applies to many companies that make purchases on credit. Well, when money is concerned, not every government is contended. Countries need to take loans to fulfil their financial needs. When countries borrow money, it becomes a part of their National debt. The national debt is the combined debt a government of the country owes. It may include other governments, corporations, or even private individuals like treasury bonds. Indeed, more than a few criteria are used to decide which countries have the highest debts

A few of them are raw dollars and debt to GDP ratio.

Key Highlights

  • A country's debt is an important indicator that shows the economic sustainability of its finances.

  • Japan has a national debt of above 100% of its GDP for two decades.

  • If the GDP ratio is more than 77%, it implies that, in some cases, countries can hinder their economic growth.

  • Some countries even have a debt-to-GDP ratio of less than 5%.

Here, we have used external debt in U.S. dollars to estimate countries with the highest debt. 

U.S. -  $33.83 Trillion (122.56 % of GDP)

 The U.S. government in September 2023 hit a significant fiscal threshold where its national debt exceeded $33 trillion. The government has borrowed $33 trillion to meet its operational expenses. This means the U.S. owes to others and to itself. In the last 100 years, the U.S. Federal debt has increased from $44 billion in 1923 to $33.17 trillion in 2023. The U.S. government pays interest for using lenders' money. However, the national debt has increased yearly over the past ten years. Still, the interest expenses during this period have remained stable due to the low-interest rate. Also, the investors see that the U.S. government has a shallow risk of default.  

Reason for a Sharp Increase in National Debt

There are several reasons behind the sharp increase in National debt. Significant economic and political downturns, like wars and the COVID-19 pandemic, make the government owe more money. The wars in Afghanistan and Iraq cost the government over $600 billion in the military. Also, the 2008 recession made the government spend even more. During that time, President Barack Obama spent $831 billion to create jobs during the recession. President Trump increased its spending from 2019 to 2021 because of the tax cut. When governments spend more and make less from taxes, it causes the national debt to rise sharply. 

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U.K.- $8.7 Trillion (287.08% of GDP)

In January 2023, the public sector's net debt rate in the United Kingdom was only 100.1% of the country's GDP. It was the highest public sector debt since 1961. Also, the Office of Budgetary Responsibility predicts that the U.K. debts will increase in the next ten years due to some democratic factors that will put pressure on government spending. It also says that in the coming 50 years, the country's public sector debt will reach 350% of the GDP. 

Reasons for This Sharp Increase in National Debt

The ageing population and democratic changes have pressured the government to spend more, especially in the healthcare and pension sectors. Also, the small working population in the U.K. limits the country's productive capacity. Some geopolitical events, like relations with China, Russia and the Middle East, have stressed the finances. High energy prices, the cost of climate change, low productivity growth in the U.K., the financial crash of 2009, and the recent coronavirus pandemic have led the country to cut its tax revenues.

Japan- $4.34 Trillion (263% of GDP)

 In March 2023, Japan's national debt stood at 9.2 trillion dollars. Japan has the highest debt among all the developed countries, and almost half of this debt is owed to the Bank of Japan. Japan owes 263% of its GDP. Japan faced tough times when its economy collapsed in the 1990s due to the asset price bubble. The period is known as 'Lost Decades.' The Bank of Japan used its non-traditional policy of quantitative easing to recover. In 2013, Japan's debt exceeded $10.4 trillion, becoming the country with the highest debt ratio.

Reason for a Sharp Increase in National Debt

The 2008 recession created problems for many countries, and Japan could not escape it. In the 2011 earthquake and Tsunami, Japan encountered a nuclear disaster, which increased its borrowing. In 2011, Moody even lowered its credit rating because Japan was spending more than it was making. The major drawback for Japan was when it was about to host its 2020 Summer Olympics, but the pandemic negatively impacted its preparation. 

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Netherlands- $3.79 Trillion (381.62% of GDP)

The Netherlands has a $3.79 trillion debt, which puts it in fourth place. The Dutch economy is experiencing a decline in its export volume. After the crisis in 2008, the GDP of the Netherlands has grown significantly. 

Reason for a Sharp Increase in National Debt

The country's property price bubble created numerous non-performing assets. The Dutch government bought more loans to control the crisis and pump liquidity into the country. The government intentionally increased its debt to decrease the budget deficit. 

France- $3.28 Trillion (112.06% of GDP)

France's debt has surpassed the $3 trillion mark at the beginning of 2023, which is now 112% of its GDP. France first hit its $1 trillion mark in 2003. The economy minister of France, Bruno Lee Maire, has started to reduce the debt as he launched the 2024 budget plan introduced in September. However, France is not the only country that has surpassed the 100% of its national debt in terms of GDP. The other European Union countries, including Greece, Italy, Portugal, Spain and Belgium, are among them.

Reason for a Sharp Increase in National Debt

The energy and cost of living have increased due to the Russian invasion of Ukraine. Also, the 2008 financial crisis had a long-lasting impact on the country, compounded by the Covid-19 pandemic. However, the bright side is that the increasing debt doesn't mean France is not actively paying back its existing loans. France is still considered a trustworthy country. Despite social issues and violent outbreaks, the country's political stability and credibility have attracted various investors. Other European countries like Italy and Greece do not benefit from such confidence.

Ireland- $3.26 Trillion (548.53% of GDP)

At the end of 2023, Ireland's national debt was $3.26 trillion. When Ireland joined the European Union, it became an economic miracle for the country with rising investment growth and living standards. However, this positive growth led to an unsustainable boom. Banks eased off on their lending criteria and reduced their liquidity ratio, which turned this boom into a bust because many firms lost their money, ultimately leading to losses for the Bank.

Reason for a Sharp Increase in National Debt

A deep recession in the country caused a 20% drop in nominal tax revenue, affecting GDP growth and making it difficult to reduce the debt-to-GDP ratio. After the 2011 crisis, the Irish bond yield fell significantly. In 2010, the gross external debt to GDP was 1000% of GDP (liabilities to non-Irish residents). External assets like non-banking firms offset these external liabilities.

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Italy- $3.1 Trillion (143.09% of GDP)

 Italy is one of those countries that hit the $ 3 trillion mark in 2023. Italy has the second largest public sector debt in Europe, after Greece. Despite reducing its budget deficit, the Italian bond market is struggling significantly. No buyer is willing to buy Italian bond yield because of the total outstanding debts, poor prospects of growth, and crisis in the Euro Zone.  

Reason for a Sharp Increase in National Debt

Since 1990, Italy has had slow growth, with GDP increasing at a nominal rate, which makes it very difficult to reduce the debt-to-GDP ratio. Italy's performance since 1990 has been abysmal compared to other eurozone counterparts. The problem is that Italy is now stuck in an unfortunate deflationary debt spiral. It has a poor track record of tax collection and wasteful government spending. The central portion of the Italian economy comes from the black economy, where the government cannot collect taxes or economic activities remain untaxed.

Germany- $2.81 Trillion (65% of GDP)

In the first quarter of 2023, the German government hit a record high of $2.63 billion. The Federal Statistical Office says that the government has increased 1.6% by the end of March.

Reason for a Sharp Increase in National Debt

The increase in debt is due to the rise in financial needs caused by Russia's war against Ukraine and the current energy crisis. Germany has created an extra budget for this purpose called special funds. Debts related to special funds increased 73.3% from March to April. The German government was also forced to bail out some banks during the financial crisis of 2008. The result is that the government still owns those banks and includes their debt in the nation's public debt record.

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Canada- $2.65 Trillion (126.94% of GDP)

For the first time in 2023, the Canadian national debt increased to $2.62 trillion. The increase in the Canadian National debt has concerned economists and government leaders. The Canadian government has increased expenditures during the pandemic. However, it is not the sole cause of the debt problem.

Reason for a Sharp Increase in National Debt

The Canadian government has experienced a surplus of $1.5 billion due to E.I. premiums, higher interest rates, a rise in carbon prices, and additional income tax revenue. However, government spending has wholly dented this surplus. According to a survey conducted by Montreal economic institutes, 55% of Canadians believe the government spends too much on their citizens. Due to higher spending, borrowings are increasing, causing interest rates to rise. This year, the Canadian government has spent around $69 billion on annual debt interest payments.

China- 12.45 Trillion (12.55% of GDP)

In 2023, the Chinese government's debt increased to $12.58 trillion, and the central government of the People's Republic of China ordered its Bank to roll over debts in a debt reconstruction. Also, Standard and Poor's Global Rating has stated that the Chinese local government may have an additional balance sheet debt. The highest level of debt has concerned China on its economic issues. 

Reason for a Sharp Increase in National Debt

The problem with China started with its real estate sector. The over-construction and decline in property prices resulted in a lack of interest from potential buyers. Many real estate developers borrowed from foreign investors and failed to meet their debt obligations. The same happened with domestic banks. In many parts of the country, the irregulated or lightly regulated financing units granted loans. This money was used to cover daily expenses, pay interest on loans, and construct loans, bridges, public parks, and other infrastructure. China got into trouble and struggled to repay its lenders. Also, China didn't use the borrowed money productively and efficiently, as debt has yet to generate sufficient returns.

How Many Countries Owe the United States the Most Money?

Indeed, the US is the biggest debtor in the World. However, it is also the largest grantor. Many countries owe a large amount to the U.S. Many countries trust the USA due to the liquidity and safety of the assets. Also, most Global trade is done with the U.S. dollar, and many countries see the U.S. as a haven for investment. Some of the countries that owe the U.S. money are


Japan owes $1.1 trillion to the USA in Treasury Securities. Japan holds 14.86% of foreign-owned debt to the USA. 


China was once the largest holder of the U.S. debt. The Chinese economy expanded in the last decades, and the USA could have missed this opportunity. As of January 2023, China owes $859 billion.

The United Kingdom

The United Kingdom is the third largest holder of U.S. debt, accounting for $668 billion. It also holds 9.02% of U.S. foreign debt.


The Brussels-based Euroclear is a major European financial house that settles securities transactions. It holds assets of more than 2,000 clients. This contributes to Belgium's U.S. debt of $331 billion. 


 Luxembourg is the fifth largest U.S. debt holder, with $318 billion in U.S. treasuries. The primary reason behind this is Luxembourg is often called a tax-haven country where wealthy investor part their fund in local companies.

Bottom Line

Here, we have discussed countries with the highest debt and why they borrow. Debt is often misunderstood as people see it as something negative. However, it is a crucial part of making financial decisions. Debt will only give positive returns if appropriately managed. This happens not only with individuals but also with countries, including developed countries. When countries fail to manage their debts, it could result in a debt spiral or even the country's sinking. Many examples of such countries have failed to manage their borrowings, resulting in an economic shutdown. 

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Win Harrison 11 Feb, 2024


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