GDP and external debt. No chance of payout

Raising funds through external loans is a fairly common practice among state economic institutions. Foreign capital serves to improve the financial performance of the state, while forming the country's external debt. International borrowing can both improve the economy of a single state, and lead it to serious problems and cause a crisis. Public debt affects the size of civil taxes and is one of the reasons for the slowdown in economic development.

What is external debt

Attracting borrowed funds from private and state structures of foreign citizenship leads to the accumulation of debt obligations of the state in question. Funds can be used for various purposes, including to normalize the state of the domestic economic climate. Funds, private investors, banks, etc. can act as sources of funds.

The formation of external public debt (ie borrowing) is carried out through operations in the debt market or through direct loans. Federal loan bonds (Russia) or other securities of a similar type are considered the main instruments for raising capital by the state. The size of the public debt is a dynamic value calculated by adding up all the credit obligations of the country.

A positive aspect of international financial resources is the increase in liquidity, leading to increased consumer activity and industrial growth. The funds raised can be used to refinance the country's external public debt, that is, repay previous loans. Social and budgetary programs can also be financed from funds raised through external channels.

Servicing external debt is one of the main factors slowing down the growth of the GDP indicator, since the funds allocated to repay the debt and interest on it are withdrawn from the total volume of state capital.

The main types of external debt

External borrowings have typical and periodic differences, which determine:

• corporate external debt - financial obligations of economic entities performing certain activities within the state. Both private companies and public companies are taken into account. This type is taken into account when determining the total amount of the country's external public debt, but does not impose financial obligations directly on the state, except in the case of state guarantees and security;
• public external debt - a set of obligations assumed by municipal and federal government agencies, including guarantees for private and corporate loans;
• current public debt - obligations, the execution of which is limited to a period of 12 months;
• national debt - the totality of all obligations, the execution of which is scheduled both for the current period and for the future.

Separately, it should be noted the terms for which the lender is ready to allocate funds. There are short-term, medium-term, as well as long-term loans. In the latter case, the lender provides money for five years or more, in the first two - these are terms of up to a year and five years, respectively.

Short-term loans, characterized by high interest rates and narrow time frames, are considered less profitable for the state. Often the borrower resorts to rollover and consolidation, as well as other contractual concessions on the part of the lender. Thus, it is short-term loans that can make up a large part of the country's external public debt and exert significant pressure on the economy and personal financial well-being of citizens.

It is not difficult to distinguish between the two presented concepts; public debt is understood as the total (cumulative) debt of the state to creditors operating in the domestic and foreign markets. When determining the size of a country's public debt, funds borrowed by the state itself are not taken into account. Indebtedness to state institutions does not affect the reported indicators of public debt.

Accordingly, the external public debt is an integral part of the public debt as a whole. This concept combines debt and obligations to pay interest taken by the state in favor of foreign financial institutions. Organizations such as:

• IBRD;
• EBRD;
• AVF, etc.

The first two structures are the main creditors of most of the states existing in the world. The activities of the represented organizations are not limited to the provision of loans, it is in their interests to carry out structural adjustments in the economies of the countries of applicants for funds. In addition to interest on public debt, the Bank for Development and Reconstruction, as well as the Monetary Fund, get the opportunity to introduce their own employees into the foreign system to manage and change basic economic and social models.

Organizations such as the Arab Monetary Fund or the EBRD have similar functionality and capabilities, but operate in a smaller area limited by national, economic interests. Mention should be made of informal structures that solve financial issues at the global level, without having the status of an international financial organization.

These include the London and Paris clubs, the first was created by banks, the second unites the governments of countries with the most developed economies. In private, club meetings may decide the fate of the country's internal or external debt, on terms that suit the parties or one of the parties to the meeting. Mandatory compliance of the terms of the transaction with the universal principles of morality is not guaranteed.

Public debt has a negative impact on the overall situation of the financial and economic system of the state. The presence of levers of influence on the unique economic characteristics and features of market competitors implies significant limitations in terms of the systemic development of the state. A number of reasons have been identified that make the external debt of the state the most burdensome, among them:

• access of foreign structures to preferential prices for the debtor's resources;
• high interest, requiring payment by any means, including reserve;
• the possibility of infringement of some rights of the country of the borrower;
• downgrading of the main ratings of a country with a significant external debt.

The degree of economic influence of the creditor depends on the amount of debt as a percentage of GDP. When the debt reaches 30%, the government is limited in new loans on existing terms. One of the more common steps taken by the lender is to increase the percentage of own remuneration, that is, loan programs become more expensive.

At the moment when the borrower's economy reaches certain "bottoms", the international fund offers its own specialist to advise the debtor's leading economic managers who allowed the existing problems to arise. In addition, external public debt has a direct impact on the budget, provoking the emergence of a deficit. The lack of capital in the economy makes new borrowing a necessity.

The population of a country that has fallen into a "debt vicious circle" feels price pressure and is forced to pay at inflated tax rates, as well as buy expensive products. The next step of the government will be the devaluation of the national currency, as a rule, this is what international experts working under the government under a loan contract recommend. Such a situation creates a dangerous social situation, mass riots of citizens who have lost the opportunity to live their former lives may begin in the country.

Countries with the smallest external debt

Characteristic indicators of external public debt

Estimated analysis of the credit burden will be incomplete without indicating the values ​​of external debt. It is this indicator that contributes to understanding the general well-being of the studied economy. The stability and degree of investment dependence of the sovereign economy are another indicators viewed through the prism of external credit obligations. The Ministry of Finance uses the information obtained from the analysis to model further economic scenarios and determine the state economic course.

There are two main indicators that determine the characteristics of entire groups of data, these indicators determine the residuals and dynamics (flows). Important in calculating the size of the country's external debt are solvency ratios reflecting such aspects as:

• the volume of debt in relation to GDP;
• balance of the volume of export profit to payments on loan interest (in %);
• stability indicator - indicates the degree of potential risk associated with loan repayments;
• liquidity and ability to pay.

Many creditors consider the ratio of debt to GDP to be the most important. The debt/export earnings ratio is also important. If the indicator grows above 275%, the procedure for writing off debts from the state can be launched. The growth of this indicator leads to a change in the conditions for issuing loans.
Debt servicing is handled by administration and monitoring experts. The system performs regulatory functions affecting such issues as: the amount of debt and its thresholds, the conditions for providing funds and the development of methods to reduce the debt burden by paying off the debt or restructuring it.

With proper regulation, problems can be solved in the following areas:

• limiting the debt burden;
• reducing the cost of borrowing;
• increase in guarantees for the fulfillment of obligations undertaken.

The methods used include managing the duration of the loan agreement, restructuring the external public debt and switching to more profitable programs, etc. There are three main debt repayment systems: financial - works from the implementation of projects and obtaining additional profit; budget - fulfillment of debt obligations at the expense of the state budget. A combination system may also be used.

Debt calculations are most often carried out in US dollars; it is acceptable to use the national currency or one of the currencies formed by the total external debt. To obtain more accurate indicators, a percentage system is used. At the moment, the United States economy has the largest debt, the country owes more than $14.59 trillion to creditors. The total value of world external debt exceeds $54 trillion, which is exactly how much countries owe to funds and other international creditors.

List of countries by external debt

Place in the world		Percentage of debt to GDP
1	Japan	250.91
2	Lebanon	147.62
3	Italy	131.71
4	Eritrea	127.5
5	Portugal	127.33
6	Cape Verde	122.25
7	Butane	122.12
8	Jamaica	116.07
9	USA	107.48
10	Barbados	106.58
11	Belgium	106.52
12	Gambia	99.24
13	Libya	98.94
14	France	98.84
15	Spain	98.47
16	Singapore	97.93
17	Maldives	95.84
18	Cyprus	95.32
19	Iraq	95.22
20	Mauritania	94.58
21	Sao Tome and Principe	93.77
22	Ukraine	92.31
23	Belize	92.04
24	Bahrain	92.01
25	Canada	90.56
26	Croatia	88.99
27	Egypt	88.82
28	Antigua and Barbuda	88.08
29	Great Britain	87.92
30	Saint Lucia	87.87
31	Jordan	87.45
32	Ireland	84.6
33	Austria	83.85
34	Mozambique	82.02
35	Slovenia	81.78
36	Saint Vincent and the Grenadines	81.73
37	Dominica	81.28
38	Brazil	80.49
39	Grenada	78.26
40	Serbia	77.94
41	Montenegro	76.99
42	Sri Lanka	74.83
43	Hungary	74.46
44	Kyrgyzstan	73.52
45	Ghana	72.21
46	Trinidad and Tobago	69.4
47	Republic of the Congo	68.99
48	Belarus	68.89
49	Angola	68.65
50	Albania	67.77
51	Israel	67.69
52	Bahamas	67.56
53	Malawi	67.45
54	Finland	66.25
55	Laos	66.11
56	Germany	65.88
57	India	65.56
58	Netherlands	64.89
59	Vietnam	64.82
60	Uruguay	64.01
61	Morocco	63.97
62	Pakistan	63.66
63	Togo	63.13
64	Salvador	61.79
65	Djibouti	61.33
66	Argentina	60.87
67	Malta	60.78
68	Tunisia	59.27
69	Ethiopia	59.03
70	Zambia	58.61
71	Lesotho	58.5
72	Seychelles	58.49
73	Yemen	58.15
74	Puerto Rico	57.7
75	Mauritius	57.56
76	Samoa	57.01
77	Qatar	56.38
78	Senegal	56.22
79	Saint Kitts and Nevis	55.98
80	Malaysia	54.96
81	Kenya	54.96
82	Mexico	54.89
83	Zimbabwe	54.89
84	Tajikistan	54.43
85	Guyana	54.1
86	Poland	52.85
87	Iceland	52.63
88	Sudan	52.43
89	Sierra Leone	52.14
90	Central African Republic	52.11
91	Republic of South Africa	52.11
92	Slovakia	51.89
93	Honduras	49.76
94	Gabon	49.52
95	China	49.32
96	Armenia	48.93
97	Bolivia	48.28
98	Colombia	47.99
99	Niger	47.85
100	Denmark	47.73
101	Liberia	47.65
102	Costa Rica	47.34
103	Guinea-Bissau	45.83
104	Moldova	45.02
105	Guinea	44.71
106	Bosnia and Herzegovina	44.5
107	Thailand	44.49
108	Fiji	44.18
109	Switzerland	44.12
110	Azerbaijan	43.8
111	Rwanda	43.27
112	Suriname	43.07
113	Papua New Guinea	42.71
114	Tanzania	42.58
115	Sweden	41.9
116	Oman	41.7
117	Lithuania	41.42
118	Cameroon	41.33
119	Czech	40.97
120	Benin	40.63
121	Romania	40.21
122	Uganda	40.16
123	Australia	39.96
124	Macedonia	39.67
125	Georgia	38.77
126	Chad	38.46
127	Madagascar	38.11
128	Ecuador	37.89
129	Vanuatu	37.79
130	South Korea	37.45
131	Panama	37.41
132	Taiwan	37.3
133	Burundi	36.96
134	Republic of Haiti	36.21
135	Mali	36.07
136	Dominican Republic	35.85
137	Latvia	34.67
138	Bangladesh	34.18
139	Philippines	33.79
140	Tuvalu	33.32
141	Burkina Faso	33.01
142	Cambodia	33.01
143	Marshall Islands	32.5
144	Myanmar	32.24
145	Nicaragua	32.16
146	Namibia	31.82
147	Ivory Coast	31.47
148	Bulgaria	30.62
149	South Sudan	30.47
150	Comoros	29.59
151	Nepal	29.45
152	Turkey	29.2
153	New Zealand	29.02
154	Indonesia	28.4
155	Norway	27.94
156	Paraguay	27.28
157	Equatorial Guinea	27.25
158	Venezuela	27.13
159	Saudi Arabia	25.77
160	Peru	25.48
161	micronesia	25.25
162	Turkmenistan	24.54
163	Algeria	24.45
164	Kosovo	24.36
165	Guatemala	24.28
166	Swaziland	22.77
167	Chile	22.51
168	Democratic Republic of the Congo	22.18
169	Luxembourg	22.13
170	Kuwait	22.08
171	San Marino	21.57
172	Kiribati	20.77
173	Kazakhstan	20.46
174	United Arab Emirates	19.71
175	Russia	19.43
176	Iran	17.71
177	Uzbekistan	15.19
178	Nigeria	13.98
179	Botswana	11.83
180	Solomon islands	10.07
181	Estonia	9.16
182	Afghanistan	8.01
183	Brunei	3.52
184	Hong Kong	0.06
185	Macau	0

Below is the ratio of the public debt of each country to GDP

Top 15 countries with the largest external debt. Photo: penge.dk

Since 1979, the World Economic Forum (WEF) has annually ranked countries based on 12 indicators of competitiveness. One indicator is the level of public debt, which shows how well a country is able to cope with debt without significant harm to the financial system. The lower the debt-to-GDP ratio, the better.

Below are the 15 countries in the world with the largest external debt.

15. France

Public debt: 96.8%.

Due to low productivity and low wages this year, France's public debt relative to GDP has risen significantly.

14. Singapore

Public debt: 98.2%.

Despite the fact that Singapore is one of the richest countries in the world, its public debt in relation to GDP is 98.2%. And this despite the fact that the figure was reduced from 103.8% last year.

13. Spain

Public debt: 99%.

Spain has been trying for several years to fight unemployment, increase productivity and stimulate economic growth after the country received billions in loans from the EU to support the economy.

12. Barbados

Public debt: 103%.

Barbados is the richest and most developed country in the eastern Caribbean region. It is also a tax haven. However, the country is still struggling to recover from an 8-year-old credit crunch and its residents are forced to live under austerity.

11. USA

Public debt: 105.8%.

The United States is on the eve of the presidential election, which will be held on November 8, where Americans will choose a new head of state, which will be either Hillary Clinton from the Democratic Party or Donald Trump - the Republican candidate. It is also worth noting that the country expects the Fed to raise interest rates at the end of 2016.

10. Belgium

Public debt: 106.3%.

Despite the status of the capital of the European Union, which the capital of Belgium, Brussels, has, the country has a fairly high public debt, and there are also difficulties with labor and tax laws, the WEF notes.

9. Cyprus

Public debt: 108.7%.

Despite the fact that Cyprus managed to reduce the public debt in relation to GDP from last year's value of 112%, the country is still in the process of recovering from the banking crisis.

8. Butane

Public debt: 115.7%.

The small Asian country of Bhutan is heavily dependent on India for financial assistance and infrastructure building specialists.

7. Cape Verde

Public debt: 119.3%.

About 82% of food in Cape Verde is imported, which makes the country's economy dependent on market fluctuations.

Public debt: 124.3%.

The service sector provides about 80% of Jamaica's GDP. Among the most serious problems in the country are the high levels of crime, corruption and unemployment.

5. Portugal

Public debt: 128.8%.

The country has several times received billions of credit tranches to support the economy.

4. Italy

Public debt: 132.6%.

Public debt in relation to GDP in Italy is the second largest in the eurozone. In addition, Italians will soon decide in a referendum whether to accept the reform package proposed by the prime minister.

3. Lebanon

Public debt: 139.1%.

The war in Syria had an extremely negative impact on the country. Added to this were internal political contradictions. The combination of these negative factors had a negative impact on Lebanon as a tourist destination and, as a result, on the country's economy as a whole.

2. Greece

Public debt: 178.4%.

Greece continues to allocate more and more aid packages, and the government of the country continues to drive the population into an increasingly tight austerity framework. However, international loans do not have a positive effect on the country's economy.

1. Japan

Public debt: 248.1%.

The country's economy is growing at such a slow pace that the Central Bank recently introduced negative interest rates.

The state debt of Ukraine in relation to GDP has already reached 80%. Experts predict an increase of up to 90%.

The law of the Russian Federation adopted in 1992 divided the state debt into external and internal.

The state debt of Russia for 2018 is divided into external and internal loans, respectively, with the currency of the obligations incurred. A loan in foreign currency refers to the external debt of the Russian Federation, and ruble - to the internal.

According to the 6th article of the budget code of the Russian Federation, the external debt of the state is the obligation of the country that arises in foreign monetary units.

The state external debt of the Russian Federation are obligations:

1. federal authorities;
2. federal subjects.

The Central Bank is the official source of information on the structure, history, current state and payment plan.

Lenders are usually:

• other states;
• private foundations;

Historical data

In fact, the State debt appeared in 1991 after the collapse of the Union of Secular Socialist Republics, when the Russian Federation, as a successor, took over all debt obligations.

Due to the severe economic crisis in the 1990s after the collapse of the USSR, Russia practically did not repay loans and took on new ones. The volume of the external debt of the Russian Federation grew until 1998 and amounted to $188 billion. After the peak and end of the crisis in 1998 and overcoming the default, the size of official payments began to decrease (see).

In the early 2000s The Russian Federation began to strengthen its economic position due to the rise in oil prices.

Already in the summer of 2006, as a result of lengthy negotiations, the loan of the Paris Club was prematurely repaid - $ 22.5 billion.

By 2008, due to available foreign loans, the debt had risen again to 0.5 tron. $.

In 2013, the credits of the USSR were repaid. Paid in the amount of $ 3.65 billion, to such countries: Montenegro, Czech Republic and Finland.

The next high was reached in 2014 - over $0.7 trillion. After that, it began to decline quite quickly due to sanctions.

At the end of 2014 - beginning of 2015. over $0.1 trillion was paid out in a few months. Which eventually led to a currency crisis and a depreciation of the ruble.

In the summer of 2017, the state debt of the Soviet Union in the amount of $ 125.2 million to Bosnia and Herzegovina was repaid.

Russia external debt chart

The country's total debt is declining

As of the beginning of this year, the amount of total debt has decreased to 33% of the Gross Domestic Product from 40% previously set. This level is moderate according to the annual report of the Central Bank.

Payment schedule for this year

Russia's external debt for 2018 should decrease by $50 billion:

• $21.4 billion paid in the first quarter.
• At the end of the second quarter, payment will reach $30 billion, but so far the final figure has not been announced.

Due to the imposition of sanctions imposed on the Russian Federation, the amount of debt is decreasing in digital terms, but growing in relative terms. Experts believe that this can be explained by a decline in GDP, a depreciation of the ruble and a reduction in energy exports due to lower world prices for them.

year: causes, counter-sanctions, implications for the economy

According to experts, the growth dynamics of Russia's external debt is not critical in relation to the debt of some other world powers.

According to forecasts, Russia's external public debt for 2018-2019 will continue to grow. Despite the planned payment for this period.

Russia's GDP and external debt: According to relative readings, public debt is approximately 5-10% of total GDP, this figure is lower only in 4 world powers.

The structure of Russia's external debt in 2018

Russia's external debt in 2018 consists of the following categories:

• External public debt;
• Obligations to members of the Paris Club;
• Debt payments to non-Paris Club creditors;
• Obligations to the former states of the Council for Mutual Economic Assistance;
• Commercial loans of the former Union of Soviet Socialist Republics;
• Obligations to financial international organizations;
• Repayment of Eurobond loans;
• Bond loans;
• OVGVZ payments.

The structure of the external debt of the Soviet Union includes:

• installment agreements;
• Medium-term or short-term loans on a commercial basis, which are confirmed by bills and drafts (securities);
• Bills and drafts with payments for bearers;
• Collection is a settlement banking operation for transferring money to the recipient from the payer through the bank. A commission is charged for this operation;
• Irrevocable and revocable obligations, including bank letters of credit with installments;
• Other arrangements related to resolution by decision of the governing bodies.

Almost all debt is Eurobond loans. Securities are Eurobonds that are issued in monetary units other than the state currency.

To whom does Russia owe? External debt in 2018

before South Korea. According to the agreements, it must be repaid by 2025.

On August 8, 2017, the Russian Federation completely paid off the debts of the USSR, paying over $125 million to Bosnia and Herzegovina.

For 10 years, Russia has forgiven 80,000,000,000 dollars to debtor states. Among the countries that have received debt relief are:

• Cuba - $31.7 billion,
• Iraq - 21.5,
• Mongolia - 11.1,
• Afghanistan - 11,
• North Korea - 10,
• Syria - 0.9,
• Vietnam - 9.4,
• African states, including: Angola, Nicaragua, Ethiopia, Libya, were forgiven payments in the amount of more than 0.02 trillion dollars.

The Russian Federation has a debt to only one power - South Korea in the amount of $594 million.

The debt-to-GDP ratio compares a country's sovereign debt to its total economic output in a year. Its output is measured by gross domestic product.

This ratio is a useful tool for investors, leaders and economists. This allows them to assess a country's ability to repay its debt. A high ratio means that the country is not generating sufficient funds to pay off its debt. A low ratio means that there is a lot of economic output to make payments.

If a country were a household, GDP is like its income. Banks will give you more credit if you make more money. Similarly, investors will be happy to take on a country's debt if it grows more. Once investors start worrying about repayment, they will demand a higher interest rate for a higher default risk. This increases the cost of the country's debt. This could quickly become a debt crisis.

Tipping point

What is a tipping point? A World Bank study found that if the debt-to-GDP ratio exceeds 77 percent for an extended period of time, it slows down economic growth. Each percentage point of debt above this level costs the country 1.7 percent in economic growth.

This is even worse for emerging markets. There, each additional percentage point of debt above 64 percent will slowly rise by 2 percent each year.

How to use the debt-to-GDP ratio

The debt-to-GDP ratio allows investors in government bonds to compare debt levels across countries.

For example, Germany's debt is $2. 7 trillion, which is half that of Greece, which is 514 billion dollars. But Germany's GDP is $3. 8 trillion, which is much more than Greece's 281 billion. This is why Germany (the largest country in the EU) should have bailed out Greece, and not the other way around. The debt-to-GDP ratio for Germany is 72% and for Greece it is 182%.

So, is the debt-to-GDP ratio a good predictor of which country will default? Not always. Japan's debt-to-GDP ratio is 228 percent. Japan is not in danger of default since most of its debt is owned by its own citizens. Many Greek debts were held by foreign governments and banks. Since Greece's credit notes became mandatory, its debt was downgraded by rating agencies such as Standard & Poor's, which led to higher interest rates. Greece had to find a way to increase income, as well as cut spending and increase taxes. This further slowed the economy , which further reduced income and contributed to debt repayment.

US debt to GDP ratio is 104%. But this is not critical for a country that can issue debt in its own currency. The United States can simply print more dollars to pay off the debt. For this reason, the risk of default is very low. On the other hand, debt holders end up with money that is worth less. This will eventually force them to avoid US debt.

As a country's debt-to-GDP ratio rises, it often signals that a recession is continuing. This is because the country's GDP is shrinking as a result of the recession. This causes taxes and federal revenues to fall at the same time that the government spends more on stimulating its economy.

If stimulus spending is successful, the recession will subside, taxes (and federal revenues) will rise, and the debt-to-GDP ratio should level off.

The best determinant of investor confidence in a government's solvency is its debt yield. When the yield is low, it means there is a lot of demand for its debt. He does not have to pay with high returns. The United States is fortunate in this regard. During the Great Recession, investors fled to US debt. It is considered ultra safe.

As the global economy continues to improve, investors will be comfortable with higher risk because they want higher returns. US debt yields will rise as demand falls. When the yield is high, pay attention. This means that investors do not want debt. The country has to pay more to get them to buy their bonds.

This creates a downward spiral. High interest rates make it more costly for the country. This increases government spending, which creates a larger budget deficit, which creates more debt. A good example is the Greek debt crisis.

That is why the ratio of debt to GDP for all its types is still widely used. This is a good rule of thumb for how strong a country's economy is and how likely it is to use good faith to pay down debt.

How to Calculate the Debt to GDP Ratio

To determine the debt-to-GDP ratio, you need to know two things: a country's debt level and a country's economic performance. It seems pretty simple until you learn that debt is measured in two ways. Most analysts look at total debt. Some, like the CIA World Factbook, only look at the public debt.

This is a little misleading. In the United States, all debt essentially belongs to the public. That's why. The US Treasury has two categories. Publicly disclosed debt consists of US Treasury bonds or US Savings Bank bonds held by individual investors, companies, and foreign governments. Public debt is also owned by pension funds, mutual funds, and local governments.

Another category is intragovernmental holdings. This is a category not reported on by the CIA World Factbook because it is a debt that the federal government owes to itself and not to outside creditors. The CIA shows that the government will not extinguish itself, so what? This is just a method of accounting between two agencies.

But it matters a lot. The money that the federal government "owes itself" is largely due primarily to the Social Security Trust Fund and the federal department's pension funds. Thanks to the Baby Boomer generation, these agencies are getting more payroll tax revenue than they are now, they have to pay benefits. This means they have excess money that they use to buy Treasuries. The government is just spending extra money on all government programs. When the Boomers retire, Social Security will pay out cash in their treasury holdings to pay benefits.

Therefore, you should always look at the total debt, not just the debt to society. This is because all federal debt is ultimately owed to the public. This is why intra-government holdings must be counted in the U.S. debt-to-GDP ratio.

Frequently Asked Questions on Debt to GDP

• What is the difference between real and nominal GDP?
• What are the components of GDP?
• What is the best way to compare GDP between countries?
• What is the difference between GDP and GDP growth rate?
• What is the ideal growth rate?
• What is the current GDP growth rate?
• What is depression?

Regarding the notorious "US national debt" the same principle works. Yes, the debt is really big, now it is approaching $20 trillion. However, the US economy is not small either. The size of the annual GDP is slightly less - $19.3 trillion. If translated into human language, this is a debt the size of an annual salary, which is quite acceptable.

By analogy with a salary, a debt of 100 thousand for a person with an income of 15 thousand is a huge amount, and 500 thousand for a person with an income of 100 is just an inconvenience. Therefore, in order to assess the debt burden, economists consider the ratio of public debt to GDP - the income of a country. Which, however, also means nothing.

A small debt may mean, for example, as in the case of Venezuela, not that you do not want to borrow, but that they do not want to give you.

Public debt of the countries of the world 2017, % of GDP: Table

Note by Vladimir Zykov. Who does not want to look at the big table, I will say: Ukraine - 22nd place, 92.31% of GDP; Belarus - 48th place, 68.89%; Poland - 86th place, 52.85%; Russia - 175th place, 19.43%.

According to the IMF. Updated 08/14/2018
Russia has a relatively small public debt. According to the Central Bank, a little more than $254 billion. However, together with the debts of enterprises (they are not taken into account as state debt, although enterprises are mainly state-owned), the amount is already significant - $513 billion. This is already 40% of nominal GDP.

Maxim Kotov, School of the Investor.