Top 10 Countries with the Highest Debt-to-GDP Ratios in 2025
Post-Pandemic Fiscal Challenges
As the economies of the entire globe are still affected by the consequences of the once-in-a-century shock provoked by the COVID-19 pandemic, global debt remains one of the most urgent issues. In 2025, there is still a massive increase in levels of borrowing and debt-to-GDP ratios in many countries to restore the destruction triggered by the health crisis.
This article highlights the top 10 states that have the highest debt-to-GDP ratios, identifies the causes of growing indebtedness, outlines their economic effects, and provides implications on how the most heavily indebted countries manage their debt in the evolving environment of heightened uncertainties.
Debt-to-GDP Ratio: An Overview
The debt-to-GDP ratio is a critical indicator that shows a country’s public debt concerning its gross domestic product. The ratio indicates how well a nation can pay its dues and is a critical measure used as a tool to determine a country’s credibility in the financial markets as well as to predict systematic economic shocks.
If the country’s debt servicing starts to outpace GDP growth, the high ratio puts it at risk. A moderate one implies more sustainable public finances.
Global Debt Overview in 2025
In 2025, the average debt-to-GDP ratio across the world will amount to 94.7% according to the International Monetary Fund, remaining at 2.3 percentage points higher than in 2024 but below the 98.7% peak in 2020 during the pandemic.
Meanwhile, the global debt will amount to 235% of the GDP, registering a reduction from the COVID-19 high by 23 p.p. Stimulative fiscal policies aimed at protecting households, strengthening healthcare systems, and raging infrastructure investment resulting in the highest global borrowing rates in peacetime were the key enablers of this surge.
At the same time, the ascent of interest rates, inflation, and tension in major geopolitical hotspots complicate the process of managing debt for the most indebted countries.
Table 2: Top 10 Countries with the Highest Debt-to-GDP Ratio in 2025
A global list from The Economist
| Country | Rank | Debt-to-GDP Ratio (2025) | Key Factors |
|---|---|---|---|
| Japan | 1 | 230% | Decades of fiscal stimulus to counter deflationary pressure and an aging population have ballooned public debt. |
| Lebanon | 2 | ~283% | Banking collapse, hyperinflation, and political paralysis have triggered severe economic contraction. |
| Sudan | 3 | 222% | Ongoing conflict and governance challenges fuel recurring fiscal deficits and reliance on external financing. |
| Singapore | 4 | 176% | Proactive issuance of long-term bonds to fund infrastructure and social programs backed by strong fundamentals. |
| Eritrea | 5 | 164% | Limited diversification and heavy external borrowing constrain fiscal resilience. |
| Greece | 6 | 162% | Lingering effects of the 2010 sovereign debt crisis, slow growth, and elevated social spending. |
| Argentina | 7 | 155% | Cyclical defaults and chronic inflation undermine market confidence and increase refinancing costs. |
| Venezuela | 8 | 145% | Economic collapse, hyperinflation, and sanctions have decimated GDP despite vast oil reserves. |
| Italy | 9 | 135% | A large public sector and generous welfare system and structural growth challenges. |
| Bhutan | 10 | 123% | Rapid infrastructure borrowing against a modest economic base relegated debt sustainability. |
Data include many different methodologies and end years.
Leading Factors in Country Profiles and Debt Drivers
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Japan: With a 230% ratio, it relies on a captive domestic investor base and ultra-low interest rates. Aging society limits fiscal room by swelling pension and healthcare spending.
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Lebanon: The unofficial ratio exceeds 280%, driven by the currency collapse, hyperinflation, and a near-total loss of trust in the banking sector.
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Sudan: The 222% ratio reflects repeated cycles of conflict-related spending, weak revenue mobilization, and external checks.
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Singapore: The low ratio is strategically issued to finance growth-friendly projects, so its level carries no comparison to crisis-driven credits.
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Eritrea: Impeded by sanctions and minimal FDI, its poor external borrowing profile leans heavily on concessional loans.
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Greece: Despite years of bailout programs, it still struggles with legacy payments, even slowly improving competitiveness.
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Argentina: The 155% capital stock ratio is driven by erratic fiscal policy, chronic high inflation, and successive restructuring efforts.
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Venezuela: Its economy shrank by over 70% since 2013, so the apparent ratio boom reflects collapsing GDP rather than liabilities.
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Italy: Its 135% ratio grows with lackluster expansion and decades of political logjams over fiscal reform.
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Bhutan: Borrowing heavily, 10 times over GDP, possible pending for the fledgling portfolio for hydropower and road development projects.
Implications of High Ratios
Rising interest rates contribute to higher service and less room for health, education, and social security. High ratios heighten the effects of external shocks—a drop in fuel prices, currency speculations, and security threats can offset crises.
Because inflation and currency depreciation have diminished actual incomes or intensified household feuds. However, strong institutions and public capital markets, like Japan and Singapore, may retain such high ratios.
Strategies to Deal with Public Debt
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Fiscal consolidation: Gradually reduce deficits through remarkable spending changes and combination adjustments.
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Structural reforms: Improve tax authorities, enhance efficiency, and grow economic activity.
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Debt restructuring: Modify maturities, reduce interest rates, or eliminate part of the outstanding principal with creditors.
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Monetary-fiscal coordination: Utilize low-interest rates and national bond markets to repay re-financing risks.
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International organization: Seek multidisciplinary support and technical assistance from the IMF, World Bank.
SEE The list of top Largest Economies in the World 2025 GDP
Future of Global Debt
Global debts are at safe levels but still near a high record. The future trajectory is based on certain factors:
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Interest rate changes — increased rates will enhance the pressure used to pay the financial obligations.
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Growth dynamics — substantial GDP development diminishes percentages of financial obligation.
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Orderly public — quality budget planning and receptive governance are the utmost.
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Political steadiness — borrowing costs may soar and market access may be limited across political dangers.
Indisputably, the global post-pandemic world needs structural modifications and decisive debt management to eradicate inflation issues. While the economies are recovering, some of these economies will change and lead to involuntary adjustments.
