Why in News
According to the International Monetary Fund (IMF), the world is facing a renewed surge in public debt, with projections for 2025 indicating that several nations are seeing debt levels surpass those recorded during the peak of the COVID-19 pandemic. The IMF’s Fiscal Monitor report (April 2025) outlines that the global public debt-to-GDP ratio could once again approach critical levels, raising economic and fiscal sustainability concerns across both developing and advanced economies.
In a striking shift, Sudan has overtaken Japan to become the country with the highest debt-to-GDP ratio in the world in 2025, driven by internal conflict and economic instability. Simultaneously, the debt burden of major economies like the United States, France, and Canada remains alarmingly high, pointing to structural deficits and geopolitical challenges.
Background and Context
The COVID-19 pandemic triggered an unprecedented wave of government borrowing as nations scrambled to manage public health crises and implement large-scale stimulus programs. As a result, global public debt reached 98.9 percent of GDP in 2020.
Despite economic recovery in subsequent years, ongoing geopolitical instability, such as trade tensions—especially following recent U.S. tariff declarations—and inflationary pressures have led to a fresh increase in borrowing needs. These developments have significantly worsened fiscal outlooks worldwide, with the IMF warning that public debt levels could rise to 117 percent of global GDP by 2027 under worst-case conditions, and nearly 100 percent (99.6%) by 2030.
Key Insight: Top 10 Countries with the Highest Debt-to-GDP Ratio in 2025
One of the most alarming revelations from the IMF’s recent findings is the composition of the top 10 countries with the highest public debt in 2025. These nations face severe fiscal pressures due to either persistent budget deficits, economic mismanagement, or structural vulnerabilities such as demographic decline or high external debt.
Below is the detailed list of the ten most indebted countries based on their general government gross debt as a percentage of GDP:
| Rank |
Country |
General Government Gross Debt (% of GDP) |
| 1 |
Sudan |
252% |
| 2 |
Japan |
234.9% |
| 3 |
Singapore |
174.9% |
| 4 |
Greece |
142.2% |
| 5 |
Bahrain |
141.4% |
| 6 |
Maldives |
140.8% |
| 7 |
Italy |
137.3% |
| 8 |
United States |
122.5% |
| 9 |
France |
116.3% |
| 10 |
Canada |
112.5% |
Source: IMF – World Economic Forum, April 2025
Country Highlights and Analysis
Sudan Tops the List Amid Crisis
Sudan, battling prolonged internal conflict and facing major macroeconomic instability, has reached a debt-to-GDP ratio of 252 percent, the highest in the world. Years of political unrest, loss of oil revenues, and economic sanctions have crippled the country’s capacity to manage its fiscal responsibilities.
Japan: Debt Burden Persists Despite Economic Strength
Although Japan remains a developed and technologically advanced economy, its public debt level of 234.9 percent continues to be among the highest globally. Key contributors include persistent fiscal deficits, an ageing population, and years of low economic growth.
The United States and Other Developed Economies
The United States, ranked eighth, has a public debt ratio of 122.5 percent of GDP. Despite being the world’s largest economy, its rising federal deficit and spending on defence, healthcare, and interest payments have contributed to the ballooning debt. France and Canada follow closely at 116.3 percent and 112.5 percent, respectively, reflecting similar challenges in social welfare spending and economic recovery post-pandemic.
Where Do China and India Stand?
Unlike the top 10 debt-heavy nations, China and India are relatively better positioned in the global debt rankings:
- China ranks 21st, with a debt-to-GDP ratio of 96 percent. While high, this is lower compared to most developed nations and reflects China’s controlled fiscal expansion model.
- India holds the 31st position, with a debt-to-GDP ratio of 80 percent. The Indian government has set a long-term target to reduce this ratio to 50±1 percent by March 31, 2031, aiming for sustainable debt levels through fiscal consolidation and economic growth.
Future Outlook: Risk and Recovery
The IMF warns that unless corrective measures are adopted, global public debt could surpass levels last seen during World War II. Key risks include:
- Continued geopolitical instability
- High interest rates
- Sluggish global growth
- Elevated inflation and subsidy bills
In this scenario, even a temporary shock—such as another trade war, health crisis, or commodity spike—could accelerate debt vulnerabilities.
Nations are now being urged to adopt credible medium-term fiscal plans, enhance tax collection efficiency, curb unproductive subsidies, and invest in growth-driving sectors to prevent debt spirals.
