As of 2025, no large or major country is completely free of debt. However, a few small countries have very little or almost no national debt.

This means that every major country in the world—like the U.S., China, or India—owes some amount of money, either to other countries, banks, or investors.

But there are a few small or less-developed nations that have managed to keep their government debt very low, meaning they don’t owe much at all compared to others.

📉 Countries with Little or No Public Debt

According to World Population Review, only two sovereign states are believed to be completely free of debt: Liechtenstein and Niue.

Additionally, some countries have very low debt-to-GDP ratios, including:

• Brunei: 2.3%
• Kuwait: 3.4%
• Turkmenistan: 4.7%
• Cayman Islands: 7.6%
• Afghanistan: 10.9%
• DR Congo: 13.3%
• Russia: 14.9%
• Bosnia and Herzegovina: 17.1%
• Eswatini: 18.91%

These countries are often referred to as “debt-free” due to their minimal debt levels.

📈 Countries with High Debt Levels

On the other end of the spectrum, several countries have very high debt-to-GDP ratios:

• Japan: Approximately 250%
• Italy: Approximately 135%
• United States: Approximately 123%
• France: Approximately 111%
• United Kingdom: Approximately 101%

High debt levels usually happen because the government spends a lot of money, often to boost the economy or support public programs

Governments sometimes borrow money (creating debt) to pay for things like building roads, helping people during hard times, or keeping the economy strong. This borrowing adds up over time, especially when they spend a lot through programs or emergency help like stimulus checks.

External Debt and Debt-To-GDP Ratio

Here’s a detailed yet easy-to-understand overview of external debt and debt-to-GDP ratio, including the top 10 countries for 2025:

💰 What Is External Debt?

External debt is the money a country borrows from other countries or international lenders. This can include:

• Loans from other governments
• Money borrowed from global institutions like the World Bank or IMF
• Bonds sold to foreign investors
• Bank loans from overseas

Simple Example: If India borrows money from the U.S. or from the World Bank, then that borrowed money is part of India’s external debt.

Key Points

🖋 External Debt must be paid back in foreign currency, not the country’s local money.

🖋 Countries use this money for things like building roads, schools, or managing budget shortages.

🖋 Too much external debt can be risky, especially if the country’s currency loses value or if global interest rates go up.

🌎 Top 10 Countries By External Debt

Here’s a clear and detailed overview of the top 10 countries by external debt (as of Sept 2024), based on total external liabilities:

Note: These figures represent the total amount of debt each country owes to foreign creditors.

💡 What This Means?

• External debt includes all money owed to foreign entities—banks, investors, governments, and international institutions.
• These totals often exceed domestic GDP, meaning countries like Ireland (4,052% of GDP), Luxembourg (345%), and France (293%) have particularly high external debt burdens.

📊 What Is Debt-To-GDP Ratio?

The Debt-to-GDP ratio measures a country’s public debt compared to its annual economic output (GDP). In other words, The Debt-to-GDP ratio shows how much a country owes compared to how much it earns (its economy)

It is calculated by,

Debt-to-GDP Ratio = (Total National Debt ÷ Gross Domestic Product) × 100

Simple Examples,

• If a country has $1 trillion in debt and its GDP is also $1 trillion, its debt-to-GDP ratio is 100%.
• If debt is higher than GDP (say $1.5 trillion debt and $1 trillion GDP), the ratio is 150%.

Key Points

🖋 A lower ratio (like 30%–60%) means the country is likely managing its debt well.

🖋 A higher ratio (like over 100%) might mean the country is borrowing too much compared to what it produces.

🖋 But a high ratio isn’t always bad—it depends on the country’s economy, income sources, and ability to pay back.

🌎 Top 10 Countries By Debt-To-GDP Ratios

Here’s a clear and detailed overview of the top 10 countries by Debt-To-GDP Ratios (as per IMF 2025):

💡 What This Means?

• Japan leads with a massive debt of approximately 235% of GDP, mainly due to aging population costs and deflationary pressures.
• Sudan sees a ratio of around 252%, driven by conflict and economic collapse
• Developed economies like the U.S., Canada, and France consistently lie above 100% due to high public spending and pandemic-era relief measures.

How Does This Affects The life Of General Public

The debt levels of a country—whether high or low—can significantly impact the daily lives of its citizens. Here’s how government debt affects the common public, explained in simple terms:

🍎 If A Country Has High Debt

🍏 If A Country Has Low or Manageable Debt

🌐 Real-World Example

• Japan has very high public debt but low interest rates and inflation. Its aging population puts pressure on government spending.
• India, with rising debt, faces challenges funding social programs without adding new taxes.
• Kuwait, with very low debt, provides citizens with free education, healthcare, and subsidized fuel using oil income.