Public debt is a natural component of managing national economies, with governments often resorting to borrowing to fund projects, tackle economic crises, or cover budget deficits.
However, continuous debt growth exceeding economic growth rates can pose significant financial stability challenges and escalate debt servicing costs.
International economic institutions like the International Monetary Fund use the debt-to-GDP ratio as a key indicator of indebtedness, reflecting an economy's ability to manage and repay its debts, not just the absolute debt value.
How Is National Debt Measured?
A country having a nominally larger debt doesn't necessarily mean it's the most indebted. Major economies like the United States have large total debts due to their economic size.
When comparing nations, the Debt-to-GDP Ratio is utilized, as it illustrates debt in relation to the economic size, and is the most frequently used metric in international rankings.
Most Indebted Countries in 2026
1. Venezuela
Venezuela tops the list of highly indebted countries according to the latest debt-to-GDP ratio estimates. This is due to years of economic contraction, hyperinflation, reduced oil production, and ongoing financial crises.
2. Japan
Despite being one of the largest economies globally, Japan has long maintained one of the highest public debt rates worldwide, attributed to high government spending, rising social welfare costs, and sluggish economic growth. Most of its debt is held by domestic investors, mitigating some risk compared to other nations.
3. Singapore
Singapore ranks among the highest in public debt ratios, but much of this debt is linked to managing government savings and investments, differing from countries with high debts due to chronic budget deficits.
4. Sudan
Sudan has witnessed a steep increase in its public debt ratio in recent years due to economic crises, political challenges, and revenue declines, impacting its debt management capabilities.
5. Bahrain
Bahrain is one of the most indebted Arab countries, with rising public debt levels fueled by increased government spending, economic challenges, and energy price fluctuations.
6. Lebanon
Lebanon continues to record one of the highest debt-to-GDP ratios worldwide amid the financial and economic crisis that began in 2019, leading to economic contraction and currency devaluation.
7. Italy
Italy is one of Europe's most indebted countries, with debts accumulated over decades, alongside slow economic growth and high public spending.
8. Greece
Despite improvements since the European debt crisis, Greece remains among the highly indebted nations, reflecting the financial crisis impacts from the last decade.
9. Senegal
Senegal has experienced a significant rise in its public debt ratio in recent years due to infrastructure project financing and public investments, driving it into the list of highly indebted countries according to the latest data.
10. Maldives
The Maldives heavily relies on tourism, and its debt has risen due to borrowing for infrastructure projects and the impacts of the COVID-19 pandemic on the economy and tourism industry.
Why Do Some Nations Have High Debt?
Several factors lead to increased public debt, including:
- Continuous budget deficits.
- Slow economic growth.
- Rising government spending.
- Financial crises, wars, or disasters.
- Decreased tax revenues.
- Increased debt service costs due to higher interest rates.
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