International  ·  A Comparative Ledger

The Highest and Lowest

Debt-to-GDP by Country

 
Debt as a share of GDP | The mark denotes 100 percent of GDP
Japan 235–248%
 
 
 

The heaviest gross load in the developed world. The Bank of Japan holds more than 46 percent of outstanding government bonds.

Italy 138–144%
 
 
 
 

A high Eurozone load, and among the most sensitive to shifts in European Central Bank policy.

United States 125.8–126%
 
 
 
 

Gross federal debt of 40.1 trillion dollars, carried by the issuer of the world’s reserve currency.

China Augmented 116–126%
 
 
 
 

Includes off-balance-sheet local government financing vehicles of 10 trillion dollars and state-owned enterprises of 13 trillion dollars.

France 113.0–118.4%
 
 
 
 

Sustained primary budget deficits alongside high social spending.

United Kingdom 103.6–104.0%
 
 
 
 

Heavy, long-term absorption of debt by domestic pension funds.

Canada 86% net · 110.7% gross
 
 
 
 

Provincial borrowing inflates the gross figure, while the sovereign holds strong net assets against it.

China Official 60–88%
 
 
 
 

The explicit central Treasury and local government direct bonds, before adjustment.

Germany 64–66%
 
 
 
 

Held down by the constitutional “Debt Brake” on federal borrowing.

Australia 48–50%
 
 
 
 

Supported by revenues from commodity exports.

Norway 37–40%
 
 
 
 

Backed by a sovereign wealth fund of more than 1.5 trillion dollars.

Switzerland 36–38%
 
 
 
 

Strict limits on fiscal spending, in a market long regarded as a safe haven.

Figures show gross public debt as a share of GDP; ranges reflect differing estimates. Bars use the midpoint of each range, scaled to the highest load.
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United States

Federal Reserve Policy and Benchmark Interest Rates

WASHINGTON — Sept. 16, 2026 — The U.S. Federal Reserve raised the target Federal Funds Rate by 25 basis points to 3.75%–4.00%. The move underscores the central bank's focus on price stability amid steady economic expansion and solid productivity.

Projections from the Summary of Economic Projections (SEP) point toward one additional 25-basis-point hike in late 2026, targeting a peak range of 4.00%–4.25%, with rates remaining flat throughout 2027. However, fixed-income markets reflect tighter expectations, pricing in up to three additional 25-basis-point increases over the next four quarters.

Sovereign & Public Debt Profile

  • Debt-to-GDP Ratio: 125.8%–126.0%
  • Public Government Debt Breakdown: Total gross U.S. federal debt stands at $40.1 trillion. Debt held by the public accounts for $32.4 trillion, with the remaining $7.7 trillion classified as intragovernmental holdings.
  • Fiscal Dynamics: Supported by the status of the U.S. Dollar as the primary global reserve currency, though expanding federal entitlement spending and interest costs keep the national debt trajectory on an upward slope.

Private & Municipal Fixed-Income Markets

  • Corporate Bond Debt: Total outstanding U.S. corporate bond debt reaches $12.1 trillion. Investment-grade issues account for over 70% of total issuance, supported by heavy primary market issuance.
  • Municipal Bond Debt: Total municipal debt outstanding stands at $4.5 trillion. This market provides tax-exempt funding for state and local infrastructure, education, and public works.

Japan

Central Bank Structure & Monetary Policy Shift

The Bank of Japan operates through its Policy Board, which sets monetary policy and oversees liquidity operations. Ending decades of ultra-loose monetary policy and yield curve control, the BoJ raised its uncollateralized overnight call rate to 1.25%.

The central bank maintains a cautious outlook for further rate increases, balancing wage growth against global economic uncertainty.

Sovereign Debt & Central Bank Holdings

  • Debt-to-GDP Ratio: 235%–248% (Highest gross sovereign debt load among major industrial nations).
  • Total Public Debt Volume: General government gross debt stands at ¥1,324 trillion ($8.5–$12.7 trillion equivalent depending on spot exchange rates).

BoJ Holdings: The Bank of Japan holds 46.3% of all outstanding Japanese Government Bonds (JGBs), equivalent to over 105% of Japanese annual GDP.

Demographic Pressures, Inflation, and Yield Dynamics

  1. Labor Shortages and Wage Inflation: A rapidly aging and shrinking population forces companies to compete for labor, driving structural service sector inflation.
  2. Fiscal Debt Servicing Costs: Servicing sovereign debt consumes over 22% of the Japanese national budget. Every rate increase directly elevates long-term government borrowing costs.
  3. Yield Curve Pressures: As the BoJ reduces direct yield curve interventions, long-term JGB yields face upward pressure from domestic institutional investors seeking higher risk-adjusted real returns.

China

Official Government Metrics vs. Off-Balance-Sheet "Hidden" Liabilities

Estimating China's total state-connected debt load requires distinguishing official budgetary figures reported by the Ministry of Finance (MoF) from off-balance-sheet borrowing mechanisms tracked by the International Monetary Fund (IMF) and global ratings agencies.

  • Official Direct Government Debt: The Ministry of Finance reports general budgetary government debt at 60% to 88% of GDP, reflecting explicit central treasury bonds and state-approved local government special/general bonds.
  • IMF "Augmented" Government Debt: Incorporating off-balance-sheet vehicles, local funding platforms, and public investment funds, international institutions estimate China's true "augmented" public debt ratio at 116% to 126% of GDP.

Local Government Financing Vehicles (LGFVs)

Local Government Financing Vehicles represent a primary driver of off-balance-sheet credit risk:

Broad Market & IMF Scope: Total interest-bearing debt across LGFVs stands at 71 trillion to 73 trillion yuan (~$10.0–$10.3 trillion), representing over half of China's annual gross domestic product.

  • Official vs. Operational Classification: Beijing maintains a much narrower legal designation. The central government officially recognized 14.3 trillion yuan as "hidden debt" at year-end 2023. Utilizing debt-swap packages, Beijing pared this official hidden category down to 6.5 trillion yuan, with targets to lower it to 2.3 trillion yuan by 2028.
  • The Operational Reality: The remaining ~64+ trillion yuan is categorized by authorities as "operational commercial debt" tied to state enterprise projects. However, international credit agencies note that many of these underlying public works do not generate sufficient cash flows to service their obligations without ongoing state support.

State-Owned Enterprise (SOE) & Corporate Debt Structure

  • Broad SOE Debt Burden: According to IMF tracking figures, corporate SOE debt represents roughly 74% of China's GDP (exceeding $13 trillion).
  • Implicit State Liabilities: Combined with non-financial corporate domestic debt—which accounts for over 120% of GDP—SOEs absorb a significant portion of national bank lending. When these entities face headwinds from real estate defaults or sluggish domestic consumption, their debt becomes an implicit contingent burden on the sovereign financial system.

Total State-Connected Risk Summary & De-Risking Strategy

When combining broad LGFV liabilities (~$10 trillion) with corporate SOE debt (~$13+ trillion), China sits on approximately $23+ trillion in total state-connected liabilities outside official central government debt statistics:

  • The 12 Trillion Yuan Debt-Swap Package: To mitigate systemic default risks, Beijing launched a multi-year 12 trillion yuan ($1.7 trillion) debt-refinancing framework. This initiative increases local government debt ceilings by 6 trillion yuan and allocates 800 billion yuan annually in local government special bonds over five years to swap high-cost, short-term LGFV debt into lower-cost, long-duration official bonds.
  • Monetary Policy Stance (PBOC): While Western central banks maintain elevated benchmark rates, the People's Bank of China (PBOC) maintains an easing bias—utilizing reserve requirement ratio (RRR) cuts and liquidity injections to safeguard commercial bank net interest margins and lower systemic borrowing costs.

Italy

  • Debt-to-GDP Ratio: 138%–144%
  • Debt Profile: High structural spending obligations, dynamic entitlement costs, and sluggish nominal GDP growth contribute to elevated debt levels within the Eurozone bond market framework.
  • Market Dynamics: Italian BTP yields remain sensitive to European Central Bank (ECB) monetary decisions and spread differentials against German Bund benchmarks.

France

  • Debt-to-GDP Ratio: 113.0%–118.4%
  • Debt Profile: Driven by persistent primary budget deficits, expansive public sector payrolls, and extensive social safety net obligations across the broader euro-area market.
  • Fiscal Outlook: Sovereign rating agencies continue to monitor parliamentary budget negotiations aimed at narrowing fiscal deficits below the EU's 3% benchmark target.

United Kingdom

  • Debt-to-GDP Ratio: 103.6%–104.0%
  • Debt Profile: Public sector net borrowing remains elevated due to inflation-indexed gilt obligations and increased energy/infrastructure spending.
  • Market Structure: Sovereign debt issues (Gilts) are strongly supported by structural domestic demand from U.K. pension funds and liability-driven investment (LDI) strategies.

Canada

  • Debt-to-GDP Ratio: 86% (Net) / 110.7% (Gross)
  • Debt Profile: Significant sub-national provincial bond issuance inflates gross sovereign figures.
  • Asset Offset: Substantial public sector pension fund assets and sovereign investments reduce net debt metrics significantly relative to top-line gross calculations.

Germany

  • Debt-to-GDP Ratio: 64%–66%
  • Debt Profile: Strict constitutional debt controls ("Schuldenbremse" or "Debt Brake") limit annual federal structural borrowing, maintaining low public debt relative to Eurozone peers.
  • Role in Global Markets: German government bonds (Bunds) serve as the primary risk-free benchmark for European fixed-income pricing.

Australia

  • Debt-to-GDP Ratio: 48%–50%
  • Debt Profile: Strong natural commodity export revenues and balanced fiscal rules keep public borrowing moderate compared to advanced economy peers.
  • Market Outlook: Demand for Australian Commonwealth Government Securities (ACGS) remains solid, supported by robust institutional superannuation fund inflows.

Norway

  • Debt-to-GDP Ratio: 37%–40%
  • Debt Profile: The nation maintains low net debt due to immense national reserves managed by the Government Pension Fund Global (Sovereign Wealth Fund).
  • Fiscal Position: Norway functions as a net sovereign creditor, with liquid assets dramatically exceeding total outstanding public bonds.

Switzerland

  • Debt-to-GDP Ratio: 36%–38%
  • Debt Profile: Governed by the strict "Debt Brake" constitutional mechanism, which caps federal spending to structural revenues across business cycles.
  • Market Role: Swiss Confederation bonds yield lower rates than most global counterparts due to the safe-haven status of the Swiss Franc.