World’s Highest National Debt

The national debt of the country has been getting a lot of attention in the media lately. This raises an obvious question. Who has the world’s highest national debt?

Highest Debt?

The answer to the question is dependent on how we measure the debt. One method is the pure amount of money owed. The second is as a percentage of the gross domestic product of the country, better known as the GDP. The two different approaches give us two different answers.

Money Owed

When we measure the world’s highest national debt by the amount of actually money owed, there is one clear “winner.” The United States currently owes a reported $14 trillion plus to creditors. In truth, the country owes more than $100 trillion if unfunded liabilities owed to Medicare, Social Security and other programs in the next 30 to 40 years are taken into account.

The United States is in a very tough situation when it comes to dealing with this debt. The first problem is the additions being made each year. The country is currently running an annual deficit of $1.6 trillion a year. That is a huge amount to be upside down by. Until the annual deficit is dealt with, the overall debt can’t be credibly attacked.

As large as these dollar amounts are, they are a bit misleading when it comes to evaluating which country is in the hottest water with debt. The U.S. has the biggest economy in the world, so practically any debt level would put it high on the overall list if not first. Because of this, many economist feel evaluating debt as a percentage of gross domestic product is a better measurement.

Percentage of GDP

When we measure the world’s highest national debt as a percentage of gross domestic product, we get an entirely different picture. The “winner” in this case is not the United States, but Japan. The national debt of the U.S. is about 85 percent of GDP as I write this. In Japan, it is over 200 percent. Yes, more than double their gross domestic product.

Japan is being temporarily saved from economic disaster by an odd quirk. Nearly all their debt is owned by citizens and Japanese companies, which are unlikely to demand increased interest rates that would bankrupt the country. Still, the situation is perilous and only going to get worse. The Japanese have a huge population problem. The vast majority of its people are near or in retirement. This effectively means the government loses tax revenues from them and must instead pay out benefits. 

Things are so dire in Japan that the country is now contemplating a national 5 percent sales tax. This will not cure the national debt problem, but will allow the government to meet its debt payments.

Who has the world’s highest national debt level? The answer is either the United States or Japan, depending on how you do the calculation.

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