Soaring Sovereign Struggles: IMF Spotlights Debt Leaders

Japan Leads the World With a Stunning 254.6% Debt-to-GDP Ratio

The International Monetary Fund (IMF) has released a grim assessment of global public debt, ranking Japan as the most indebted country in the world with an extraordinary debt-to-GDP ratio of 254.6%. The report, published in October 2025, warns of an escalating global “supergloom” driven by unchecked borrowing and weakening fiscal discipline.

The United States follows in second place with a 136.2% debt-to-GDP ratio, weighed down by a staggering $37 trillion federal debt. Major European economies including Italy (140%) and France (111%) also feature prominently, underscoring the widespread nature of the global debt crisis.

European and Global Economies Battle Fiscal Stress

Several advanced economies continue to face severe debt challenges. Countries such as Spain (108.1%), Canada (106.2%), Belgium (104.6%), the United Kingdom (101.4%), and Iceland (94.2%) complete the list of the top ten most indebted nations.

The IMF warns that unless immediate corrective steps are taken, mounting debt burdens will hinder economic expansion and may trigger significant financial instability across global markets.

Singapore’s Strategic Borrowing Stands Out

Despite its reputation for fiscal prudence, Singapore ranks fifth with a 147.1% debt-to-GDP ratio. However, analysts clarify that Singapore’s high figure reflects strategic, long-term infrastructure investments rather than economic distress. Its robust financial reserves continue to safeguard its economy from turbulence.

Why Are Debt Levels So High? Analysts Explain

Economic analysts attribute Japan’s towering debt to decades of stagnation and extensive stimulus measures aimed at reviving growth. The United States’ situation is linked to unchecked federal spending, while Italy and France struggle with ageing populations and longstanding structural inefficiencies, placing pressure on their public finances.

IMF Calls for Balance Between Debt Control and Growth

The IMF urges governments to implement responsible borrowing strategies that balance growth-friendly policies with debt reduction. However, achieving this balance remains difficult amid rising global interest rates and persistent geopolitical tensions.

For India, which does not feature in the top 10 and maintains a debt-to-GDP ratio of around 82%, the report serves as a cautionary reminder to maintain strict fiscal discipline while pursuing ambitious development goals.

A Wake-Up Call for Global Policymakers

The IMF’s ranking has intensified the debate on sustainable public borrowing, highlighting its implications for markets, policymakers, and future generations. As global debt crosses alarming thresholds, the world faces mounting pressure to rethink long-term fiscal strategies.