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Top 10 Countries with the Most Public Debt in the World

Public debt is one of the biggest threats to our standard of living. And it is a problem no one wants to fix. We analyze the 10 countries with the most public debt in the world.


  1. Venezuela
  2. Japan
  3. Greece
  4. Italy
  5. Portugal
  6. United States
  7. Spain
  8. Cyprus
  9. Canada
  10. France


When we talk about indebted countries, the question arises as to what kind of debt we should consider. All economic agents can and do take on debt: central governments, regional government, corporations, financial entities, and households. As a result, debt can be measured in many different ways.

Debt is usually classified in three main categories: government or public sector related, corporate sector, and households or individuals.

We will discuss public debt in this analysis. Although most statistics on public debt focus on central government debt only, it is important to consider the debt existing with regional government, municipal governments, and public corporations

After all, these institutions live on the same tax base. What is important is how much debt has to be sustained by the population. It is relatively unimportant if money is owed at the federal government level or by municipalities.

Some countries are heavily centralized when it comes to decision-making and so is their debt profile. For example, in Japan, France and Italy most debt is owed by the central government.

On the other hand, power in certain countries is more decentralized. There are different levels of government, mostly central, regional and municipal. And all these governments take on debt on their own. Some examples would be the United States, Canada and Spain.

Let us analyze the 10 countries with the most public debt in the world.

To that end we will use the data published by the International Monetary Fund. The values refer to the end of the fiscal year 2021:

1) Venezuela

Venezuela does not usually come to mind when we think of indebted countries. This is because Venezuela has much bigger problems than its level of public debt, such as real food shortages and hyperinflation.

In fact, it is one of the countries with the worst economic and financial situation in the world, despite its vast oil reserves. Bad mismanagement of the country and the economy led the government to declare bankruptcy in the past. Venezuelan debt is in the process of being restructured.

In this sense, although it is true that Venezuela officially owes a lot of money to its creditors, the equivalent of 304% of its GDP, the truth is that most of it will never be serviced or repaid. Creditors will take significant losses. This is why Venezuelan bonds are trading for pennies on the dollar.

Once the debt restructuring has been completed, Venezuela will leave the ranking of countries with the most public debt in the world. Nevertheless, their more serious problems will persist.

2) Japan

Japan is the third largest economy in the world, and the country with the most public debt in the developed world. Japan’s debt to GDP stands at a whopping 254%.

This can be shocking for several reasons. First, Japan is a very prosperous and technologically advanced country. Second, it is also a very stable jurisdiction, from both a political and economic perspective. And third, it has one of the strongest currencies in the world: the Japanese Yen.

How can these things coexist with such a high level of public debt?

Mainly thanks to the Japanese export sector and its trade surplus. In other words, Japan exports far more to other countries than it imports. This means the world demands many more Yen than it sells. This helps keep the currency strong.

Additionally, Japan has one of the highest savings rate in the world. Consequently, all this public debt can easily be financed with domestic savings. This could be summarized by saying that, while the Japanese government is broke, Japanese society is very wealthy.

Something worth highlighting is that about half of Japan’s public debt is in the hands of the Bank of Japan, its central bank. This effectively means that this debt has already been monetized. Hence, the real debt pile is much smaller than the official one.

3) Greece

Greece is a country whose high level of public already led to a massive economic crisis, coupled with very painful spending cuts and a decrease in standard of living. This happened to most Southern European countries during the Eurozone debt crisis of the 2010-2013 period. But it was most heavily felt in Greece.

Greece went through a brutal economic crisis shortly after the start of the 2008 financial crisis. The recession led to the explosion of the country’s public debt, after public finances had been mismanaged for several decades.

The government had to implement very harsh spending cuts and tax increases, as well as sell many government assets.

There was also a bailout by the European Union and the International Monetary Fund, which lent money to Greece at lower interest rates. And a debt restructuring also took place, with creditors taking heavy losses.

Despite all this, public debt closed 2020 at 211% of GDP. While the European Central Bank seems ready to backstop any turmoil in the debt markets, the questions remains as to whether this may change in the future.

4) Italy

The second Southern European country in the top 10 of countries with the most public debt in the world is Italy. Italy has been suffering from debt problems since the mid-1990s, when its pension system went bankrupt. Back then, instead of restructuring the system, politicians decided to pay the difference by driving the country deeper into debt.

Italy is probably the best example of how a high level of public debt can be harmful to the real economy and the standard of living of the population. Of all major countries in the world, Italy has had the worst economic performance during the last three decades.

The Mediterranean country closed 2020 with public debt at 156% of GDP. Italy benefitted massively from bond purchases by the European Central Bank, but the situation could turn sour if that changed for good in the future

A plus for Italy is that its trade balance is positive. That means that the country exports more than it imports.

In the long term, however, Italy’s position is very delicate as its demographics point to a rapidly ageing population.

Unlike Greece, the size of the Italian economy makes it systematically relevant for the future of the Eurozone. If the Eurozone were to break up in the future, Italy could be the beginning of it all.

5) Portugal

Portugal ranks as the fifth country with the most public debt in the world, with the equivalent to 135% of its gross domestic product.

Although Portugal suffered a lot during the European debt crisis and had to be bailed out just like Greece, the Portuguese economy has fared significantly better than that of other Southern European countries since.

First, Portugal never restructured its debt. This helped its credibility in the financial markets to the point where investors already demand Portugal lower interest rates than they demand Spain.

And, second, because Portugal proved capable of carrying out far-reaching reforms with the goal of stabilising its public finances and strengthening its economy in the long term.

As a result, the level of public debt has gone down to 135% of GDP and is gradually improving. In fact, Portugal is the only country in this top 10 that has managed to stabilize its finances.

6) United States

While the United States remains the most important superpower in the world, its public finances are in very bad shape and getting worse every year.

With a public debt equivalent to 134% of GDP, the United States is not setting a good example to the world. The US government has been running huge public deficits since the 2008 financial crisis. Regardless of who is in power, getting deeper into debt seems to be the new normal for the country.

Simultaneously, the United States is also the country with the largest trade deficit in the world. In fact, in 2021, the difference between what the United States imported and exported exceeded one trillion dollars for the first time in history.

While not the topic of this analysis, American corporations are also among the most indebted in the world.

In its favor are a better demographic profile than most other developed countries and being the issuer of the reserve currency of the world, the US Dollar.

7) Spain

Spain is the seventh country with the most public debt in the world. It stands at 120% of GDP. This is a really troublesome state of affairs for several reasons:

First of all, the trend of Spain’s public debt is probably the worst of all. While countries like Greece and Italy were already highly indebted two decades ago, Spain came into the 2008 financial crisis with very little debt, close to 30% of GDP. In less than 15 years it managed to go from a very favorable position to a very dangerous one.

Second, Spanish households do not save enough to compensate the large public deficits, unlike Italy. As a result, Spain is dependent on foreign savings to finance their public debt.

Third, Spain also suffers very large trade deficits. This means it imports a lot more than it exports. If it were not a member of the Eurozone, its currency would be severely under pressure.

Finally, Spanish politicians have shown no interest in carrying out reforms that would tackle the public debt issue. As a matter of fact, it does not even seem to exist. And the Spanish public pension system is another disaster waiting to happen.

For all these reasons, Spain will probably continue to climb positions within the ranking of most indebted countries in the world.

8) Cyprus

This small island country in the Eastern Mediterranean has poor public finances. Its debt stands at 119% of the country’s GDP, which is highly dependent on tourism.

Additionally, its banking sector is also one of the weakest. In 2013 Cyprus was forced to bail in its banks. This means depositors saw a portion of their money taken to bail out the financial institutions they had entrusted their savings with. It is the first and only time something like this has happened in the European Union.

Although media coverage of that event was sparse, because it mainly affected rich Russians who banked in Cyprus, the Cypriot banking sector’s reputation suffered heavily and is unlikely to recover for decades to come.

9) Canada

Despite having a lot of things going for it, including a good demographic situation, vast amounts of natural resources, including abundant energy, and an enviable geopolitical situation, Canada has managed to rack up a huge amount of debt.

Canadian public sector debt is above 117% of GDP. In this case, it should be noted that practically half of this debt is owed by the regional governments. This is because power is very decentralized in Canada.

On top of that, Canada is also one of the countries with the highest level of household sector debt. Cheap money has fueled a massive housing bubble that has left the private sector in a very vulnerable position.

While Canada is likely to recover in the long term, its currency could suffer greatly if the country’s officials do not want to let the housing bubble deflate.

10) France

Finally, France closes the ranking of the top 10 countries with the most public debt.

While it was never considered a Southern European country during the European debt crisis, France’s situation is just slightly better than that of its neighbors in the south.

With public debt equivalent to 115% of GDP, France has the largest public sector in the world. Government spending accounts for nearly 55% of the country’s GDP.

The private sector is not responsible for even half of the economic activity. That is the natural consequence of an economy with unsustainable levels of regulation and intervention, which have led to a stagnant economy.

At the same time, France also has one of the most onerous tax systems in the world. Both their companies and their workers pay very high tax rates. And the number of people who are dependent on the state is very large.

While its demographics are better than those of other European countries, France has shown no interest in addressing its high level of public spending.

I hope you enjoyed this analysis of the 10 countries with the most public debt in the world and welcome you to subscribe to my newsletter:
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