Government Debt World Comparison

According to recent data provided by the IMF, the ten most indebted governments in the world; measured as a percentage of GDP in 2010 are Japan (225% of GDP), Greece (130%), Italy (118%), Iceland (115%), Singapore (100%), Belgium (100%), Ireland (99%), US (92%), France (84%), and Portugal (83%).

All ten countries are classified as advanced economies. The list also includes 4 of the G7 countries. All ten governments have recorded a significant increase in debt levels over the past few years. In fact, since 2006 the debt to GDP ratio for these ten countries has risen by an average of 33.5% of GDP, mostly due to the impact of the recent global credit crisis. The worst incidence of debt deterioration has been in Iceland and Ireland, where government debt levels have essentially tripled in just four years.

The high government debt levels in many developed economies could take many years to fully control. This is due to a combination of slow economic growth (and hence slow growth in tax revenue), increased demands on government to help fund an ageing population (pensions, healthcare etc), and an ageing infrastructure that requires urgent renewal.

In comparison, government debt levels in emerging economies have remained largely unchanged since 2006 at 37.4% of GDP, well below the accepted international benchmark level of 60% of GDP. In fact, with the exception of Hong Kong and Australia, the ten least indebted governments in the world are all emerging economies. South Africa’s government debt to GDP is currently around 35% of GDP for calendar 2010, rising to around 38% in 2011.

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