Are there any debt-free countries?

April 26, 2005 8:20 PM

Are there any debt-free countries? What about countries with very low/payable debt? Are their economies better or any more stable on average than those that aren't?
posted by ontic to law & government (13 comments total)

Here's a rank-order of public debt as a percentage of GDP.

Looking at places that regular Westerners might not mind moving to, Japan is at 154%, the US at 62%, Ireland at 31%, and South Korea at 14%.

Looking at places that regular Westerners might think twice about moving to, Serbia is at 123%, Uganda and Kenya are at about 60%, Uzbekistan is at 40%, and Khazakstan is at 15%.

There might be some link you could tease out with a regression, but there would be precious little signal and a whopping load of noise.
posted by ROU_Xenophobe at 9:47 PM on April 26, 2005

Not a country, but the Canadian province Alberta is debt free.
posted by dobbs at 9:52 PM on April 26, 2005

Liechtenstein?
posted by mr_roboto at 10:31 PM on April 26, 2005

Alberta is NOT debt-free. It has made provisions that are projected to cover its future debts. If the returns on those provisions dip even slightly, Alberta will lurch deeply into a deficit again. This is exactly like how around 1999 the US government was projecting immense public surpluses well into the next 50 years. We all know what happened since then.
posted by randomstriker at 11:18 PM on April 26, 2005

randomstriker, that was last year. Alberta paid off the last $3.7billion in March of this year. So yes, Alberta is debt free. They are also the least taxed people in Canada.
posted by furtive at 7:21 AM on April 27, 2005

Alberta may be debt free, but the rest of Canada is sucking wind. It's supposedly a G8 country, but on ROU_Xenophobe's linked page it's right near the bottom along with a score of third-world countries. Kinda sad.
posted by C.Batt at 7:51 AM on April 27, 2005

Thanks everyone for your answers so far. The measure of debt to GDP seems to be a more important number than actual debt -- thanks for pointing that out.

But I guess there is no real long-term advantage then as long as the debt to GDP ratio is low-enough?

C. Batt -- the way I understand it, that is a good list to be at the bottom of. The less debt to GDP ratio, the less money from taxes goes towards paying interest on the debt and the taxes are spent more efficiently.
posted by ontic at 8:15 AM on April 27, 2005

I'm confused though. Japan has the highest debt mentioned so far and they have one of the most thriving economies in the world. What gives?
posted by scazza at 8:27 AM on April 27, 2005

Those statistics are from 2003, Japan was (and still is) recovering from a recession.
posted by furtive at 8:48 AM on April 27, 2005

Mexico has very little debt? So, is there any correlation between debt and quality of the economy/life?
posted by eas98 at 9:39 AM on April 27, 2005

I don't think there are any countries with zero debt, but there are some with lots more owed to them than they owe to the rest of the world. I think Switzerland and Japan are the two largest examples, and their economic performance is not really similar, since the reasons for their positive net financial position are quite different.

I suspect that the rate of change in the level of indebtedness is usually more important than the total level. It takes a lot of debt to get to the point where making payments on the existing debt becomes a really big determinant of that rate of change. When that happens it's probably not good.

Going further into debt on a national scale can be good for the economy. Depending on exactly why the debt is increasing. The USA would be a good example of a country that has been increasing its debt at a fantastic rate for a while and seems to be economically doing just fine, for now. Maybe not for long, though.

I've seen some studies that try to compare the net financial position of nations with their rates of GDP growth and so on. Far as I remember the trend is more or less in the direction you'd expect it to be, as in less debt relative to assets is generally good, but it's not a really strong correlation.
posted by sfenders at 10:47 AM on April 27, 2005

The Falklands Islands (population 2,500) are a UK Overseas Territory rather than a country, but they are not only debt free, they have 90 million pounds in the bank, mostly from the sale of fishing licences.
posted by penguin pie at 1:44 PM on April 28, 2005

Sorry, Falkland Islands.
posted by penguin pie at 1:48 PM on April 28, 2005