The United States has the world’s highest national debt at $31.4 trillion.
Published On 31 May 202331 May 2023
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1 Jun 2023
04:05 AM (GMT)
Global debt currently stands at $305 trillion, $45 trillion higher than before the COVID-19 pandemic, according to the Institute of International Finance (IIF) – a global association of the financial industry.
Global debt is the total amount of money owed by corporations, governments and individuals around the world. Of the $305 trillion of debt, corporations account for $161.7 trillion (53 percent), governments owe $85.7 trillion (28 percent) and individuals comprise $57.6 trillion (19 percent).
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The IIF predicts that global debt will continue to rise as government borrowing remains high, affected by factors such as ageing populations, geopolitical tensions, increased costs of healthcare and disparities in climate finance.
Which countries have the most debt?
Government debt represents the outstanding financial liabilities of a country, made up of different categories such as loans and debt securities.
The IIF’s Global Debt Monitor covers 21 mature market economies including the eurozone as well as 30 emerging market countries.
The United States has the world’s highest national debt with $30.1 trillion owed to creditors as of the first quarter of 2023. Washington’s debt now stands at $31.4 trillion, raising further concerns about US government spending and borrowing costs.
To put that in context, the US owes as much money as the next four countries with the highest debt including China ($14 trillion), Japan ($10.2 trillion), France ($3.1 trillion) and Italy ($2.9 trillion).
The chart below ranks government debt around the world.
Which countries have enough money to pay back debts?
Countries with high levels of debt may offset their payments if their gross domestic product (GDP) – a measure of the total value of the goods and services a country produces – is higher than their national debt.
A government’s debt-to-GDP ratio, which compares the size of a country’s debt with its economy, is one indicator of a government’s financial sustainability. Any value greater than 100 percent indicates a country is spending more than it is making.
According to IIF, global governmental debt-to-GDP stands at 95.5 percent.
Japan, the world’s third largest economy, has the highest debt-to-GDP ratio at 239 percent. Tokyo’s high debt-to-GDP ratio can be partly attributed to its ageing population and social welfare costs.
Greece has the second highest debt-to-GDP ratio at 197 percent, followed by Singapore (165 percent), Italy (135 percent), and the US (116 percent).
What is the US debt ceiling?
The debt ceiling is the maximum amount of money the government can borrow. On January 19, the US hit its borrowing limit of $31.4 trillion. Since then, the Treasury has implemented a number of measures to avoid failing to pay back its legal obligations, known as a default.
A US default would likely push the country into a major recession, shake the world economy and lead to a spike in unemployment.
On May 28, after weeks of negotiations, US President Joe Biden and Republican House Speaker Kevin McCarthy, reached a tentative deal to raise the debt ceiling for two years while capping some spending.
After calling for a recorded vote, the House of Representatives voted to advance the bill 314 – 117 in a late night sitting on Wednesday.
FAQs
The United States has the world's highest national debt with $30.1 trillion owed to creditors as of the first quarter of 2023. Washington's debt now stands at $31.4 trillion, raising further concerns about US government spending and borrowing costs.
How does U.S. debt rank compared with the rest of the world? ›
The United States has the world's largest national economy but comes in second for most indebted country. The U.S.'s steadily rising debt-to-GDP ratio hit 121.38% in 2022, making it the third-highest in our study.
Does the US have the worst debt? ›
The United States has the largest external debt in the world. The total number of U.S. Treasury securities held by foreign entities in December 2021 was $7.7 trillion, up from $7.1 trillion in December 2020.
Is the U.S. debt larger than the economy? ›
Currently the nation's $34 trillion debt is approximately 99% of GDP and, according to the CBO, will steadily increase over the next 30 years. In the near term, the CBO expects debt as a percentage of GDP to exceed the record peak of the Second World War by 2029.
Why USA has the highest debt? ›
It began rising at a fast rate in the 1980's and was accelerated through events like the Iraq Wars and the 2008 Great Recession. Most recently, the debt made another big jump thanks to the pandemic with the federal government spending significantly more than it took in to keep the country running.
How much money does the US owe the rest of the world? ›
The US government owes money to governments, central banks, companies, and individual investors around the world. As reported by the US Department of the Treasury, the US owes a total of $7.4 trillion in Treasury securities to foreign countries.
Which country has the highest debt ranking? ›
Japan consistently ranks among the countries with the highest national debt. In 2022, the nation's debt was estimated at almost 10 trillion U.S. dollars , while it's GDP is just 4.2 trillion . The Japanese government is currently spending around half of its total tax revenue on servicing its massive debt.
Should we worry about U.S. debt? ›
The main reason Peterson and other economists are worried about the national debt is the amount of interest the government has to pay on it. As of November, servicing the national debt ate up 16% of federal spending, about the same as the government spends on defense.
Why is the US in such bad debt? ›
History of U.S. Debt
GDP shrinks during a recession while government tax receipts decline and safety net spending rises. The combination of higher budget deficits with lower GDP inflates the debt-to-GDP ratio.
Who does the US owe 34 trillion to? ›
The national debt is the total amount of money the U.S. owes its creditors, which includes “the public” (individual investors, businesses, commercial banks, pension funds, mutual funds, state and local governments, the Federal Reserve System and foreign governments) as well as other parts of the federal government, ...
Decreased savings and income
The private sector will stop seeking investments that can generate growth due to the incentive to save. This includes the lower amount of capital available once individuals stop investing in securities offered by businesses due to treasury securities being more attractive.
How can the US get out of debt? ›
Maintaining interest rates at low levels can help stimulate the economy, generate tax revenue, and, ultimately, reduce the national debt. Lower interest rates make it easier for individuals and businesses to borrow money for goods and services, which creates jobs and increases tax revenues.
Who do the US borrow money from? ›
Federal Borrowing
The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are: Backed by the full faith and credit of the United States government.
Why is US debt not a problem? ›
Is debt at that level a problem? For now, it isn't. The U.S. government borrows trillions of dollars a year at very low interest rates on global financial markets, and there doesn't appear to be much private sector borrowing that is crowded out by U.S. Treasury borrowing right now.
How much is America worth? ›
The financial position of the United States includes assets of at least $269 trillion (1576% of GDP) and debts of $145.8 trillion (852% of GDP) to produce a net worth of at least $123.8 trillion (723% of GDP).
Who owns over 70% of the US debt? ›
Of the $33T of debt, roughly 78% is owned by the public (70% US vs 30% International). The major US public owners include the FED ($6T, but they are no longer buyers), mutual funds, banks, states, pension funds and insurance companies.
Which country holds more US debt than any other? ›
Nearly half of all US foreign-owned debt comes from five countries. All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).
How is the US the richest country with so much debt? ›
The U.S. government incurs debt when it issues Treasury securities to fund the deficit between the amount of money that it receives in taxes and other revenues versus the amount of money that it spends on defense, welfare programs, the interest it pays on its current debt, and more.
Are Americans in more debt than ever? ›
U.S. Household Debt Is at an All-Time High
The total household debt of $17.3 trillion entering 2024 is a new high for the U.S. The largest increase in any category was credit card debt, which swelled by 16.6% between Q3 2022 and Q3 2023, the most recent term for which federal data was available.
Is China's national debt higher than the US? ›
China's debt is more than 250 percent of GDP, higher than the United States. It remains lower than Japan, the world's most indebted leading economy, but some experts say the concern is that China's debt has surged at the sort of pace that usually leads to a financial bust and economic slump.
