The debt-to-GDP ratio is one of the most salient macroeconomic indicators used to assess a country’s fiscal sustainability and sovereign risk. As global debt levels have surged in the aftermath of successive shocks financial crises, COVID-19, geopolitical conflicts, and monetary tightening this metric has garnered heightened attention from policymakers, investors, and international institutions.

This article critically evaluates the top 10 countries with the highest debt-to-GDP ratios in 2025, drawing on data from the International Monetary Fund (IMF, 2025), and analyzes the structural and institutional factors underlying these figures.

Top 10 Countries by Debt-to-GDP Ratio (2025)

1. Sudan – 252.0%

Sudan tops the global list with a staggering debt-to-GDP ratio exceeding 250%. This is primarily the result of a prolonged civil conflict, macroeconomic instability, and persistent external arrears. Following the secession of South Sudan in 2011, Sudan lost a significant portion of its oil revenues its main source of foreign exchange. The economy has since been plagued by currency depreciation, inflationary pressures, and isolation from international financial markets, which limited access to concessional borrowing. Without debt restructuring and substantial institutional reform, the fiscal position remains unsustainable. Most of Sudan’s debt is external and multilateral, making it highly sensitive to exchange rate fluctuations and donor negotiations.

2. Japan – 234.9%

Japan’s public debt has consistently been among the highest in the world, currently standing at 234.9% of GDP. However, this figure is less alarming in context. Japan enjoys an exceptional degree of domestic debt absorption, with over 90% of its debt held by domestic institutions such as the Bank of Japan and pension funds. The country has experienced three decades of low growth, deflation, and an aging population that necessitates increased social spending, especially in healthcare and pensions. The government’s strategy has involved persistent fiscal stimulus packages to counteract weak aggregate demand, underpinned by accommodative monetary policy. While the headline ratio is high, Japan's strong institutional framework and low interest environment allow for debt sustainability in the short-to-medium term.

3. Singapore – 174.9%

Singapore’s debt-to-GDP ratio of 174.9% may appear alarming, but it is structurally different from others on this list. The Singaporean government borrows under a unique fiscal framework: debt issuance is not for budgetary shortfalls but for investment through its sovereign wealth funds GIC and Temasek Holdings. All proceeds are sterilized and cannot be used for recurrent spending. Thus, Singapore's high gross debt is offset by even larger public financial assets, including foreign reserves and investment returns. The country maintains a AAA credit rating and is considered one of the most fiscally prudent globally. Hence, the debt-to-GDP ratio is a technical artifact rather than a sign of fiscal stress.

4. Greece – 142.2%

Greece’s high debt level is a legacy of the Eurozone sovereign debt crisis in the early 2010s. Despite partial debt relief and structural reforms implemented under IMF-EU bailout programs, public debt still stands at 142.2% of GDP. A combination of low productivity growth, high unemployment, and a large informal sector has constrained the tax base, making debt reduction slow. Moreover, Greece does not have its own monetary policy tools, being a member of the Eurozone, and thus cannot devalue its currency or monetize debt. While EU institutions have extended maturities and reduced interest burdens, the country remains vulnerable to external shocks and shifts in euro-area monetary policy.

5. Bahrain – 141.4%

Bahrain’s debt burden is largely driven by its dependence on oil revenues and limited fiscal diversification. Falling oil prices and rising social spending have led to persistent budget deficits, which the government has covered by external borrowing. As a small Gulf state with fewer hydrocarbon reserves compared to its neighbors, Bahrain lacks the buffer of large sovereign wealth funds. The country’s fiscal vulnerability was exacerbated by COVID-19, which necessitated additional spending on healthcare and social protection. Although the GCC provided a $10 billion support package in 2018, Bahrain still faces liquidity and solvency risks, particularly if global interest rates remain elevated.

6. Maldives – 140.8%

The Maldives has accumulated high public debt primarily through externally financed infrastructure development aimed at boosting tourism and connectivity. Over the past decade, the government has engaged in large-scale projects, many funded by bilateral loans from China and India. While these investments have long-term growth potential, the country’s narrow economic base heavily reliant on tourism makes it highly vulnerable to shocks, such as the COVID-19 pandemic. The absence of a diversified tax base, combined with rising external debt service obligations, places pressure on foreign reserves and risks pushing the country toward a debt crisis if tourism revenues falter.

7. Italy – 137.3%

Italy’s fiscal position has long been a concern within the European Union. With a debt-to-GDP ratio of 137.3%, Italy faces challenges rooted in low productivity, political instability, and structurally high public spending. The country’s economic growth has been persistently below the EU average, limiting its capacity to generate sufficient revenues for debt reduction. While most of Italy's debt is domestically held, investor confidence fluctuates with political events. The European Central Bank’s interventions, particularly during the COVID-19 crisis, have helped to stabilize borrowing costs, but Italy’s long-run fiscal trajectory remains a source of systemic risk to the Eurozone.

8. United States – 122.5%

The United States has seen a sharp increase in its public debt since the Global Financial Crisis and even more so during the COVID-19 pandemic, reaching 122.5% of GDP in 2025. A combination of expansionary fiscal policy, including stimulus packages, tax cuts, and military spending, has fueled this growth. Nonetheless, the U.S. dollar remains the world’s reserve currency, and U.S. Treasury bonds are widely viewed as risk-free assets. This provides the U.S. with extraordinary borrowing capacity a concept often referred to as the “exorbitant privilege” (Eichengreen, 2011). However, growing deficits and the politicization of the debt ceiling pose long-term risks to fiscal credibility.

9. France – 116.3%

France’s high public debt ratio stems from a large and persistent fiscal deficit, driven by social security spending, public sector wages, and structural unemployment. Like other European countries, France responded to COVID-19 with expansive fiscal measures that significantly increased public liabilities. Moreover, sluggish growth and high public expectations for state involvement in welfare and economic activity create a political constraint on austerity or deep fiscal reforms. Although France is a core Eurozone country with strong institutions, continued debt accumulation in a low-growth environment could erode fiscal space over time.

10. Canada – 112.5%

Canada’s debt-to-GDP ratio rose sharply in the wake of the pandemic, driven by generous fiscal stimulus, public health expenditures, and income support measures. However, Canada's macroeconomic fundamentals remain strong, with a relatively high tax compliance rate, prudent central bank operations, and flexible exchange rates. A significant share of debt is held domestically and denominated in Canadian dollars, reducing external vulnerability. That said, rising interest rates and household debt levels could interact with sovereign debt dynamics, requiring greater fiscal consolidation in the years ahead.

How is this Debts to GDP ratio is calculated?

Following IMF frameworks, a debt trajectory is sustainable if:

• The primary balance is sufficient to stabilize or reduce the debt ratio.
• Interest-growth differentials (i – g) remain negative.
• No major contingent liabilities are realized.

While headline debt-to-Gross Domestic Product ratios are important, they tell only part of the story. A holistic assessment requires understanding the structure, maturity profile, creditor composition, and macro-fiscal framework. Policymakers must prioritize sustainable growth, improve revenue mobilization, and maintain fiscal discipline.

As global debt climbs to historically unprecedented levels, the imperative for debt transparency, sound macroeconomic management, and multilateral cooperation becomes even more urgent.

By Donald Masimbi (MSc), PhD Candidate in Energy Economics