Government debt by country. Who owes the most?
Some say we should aim at having just good debts. For example, buy a property and rent it out and the rental can cover the monthly mortgage. Our wealth will continue to be positive and growing month after month and year after year. We should not have bad debts. For example, buy a car which depreciates by 20% as soon as we drive it out of the sales gallery for the very first time. This will continue until the day we sold the car which will amount to just a small amount of what we actually paid for the car for the past 7 years or 9 years depending on the loan period.
Is this true? Well, a property where the rental could not cover the monthly mortgage may still be positive. There’s the price increase also. Buying a new car versus driving an old car and keep on paying for maintenance may also be positive too. However, what about governments then? What happens when they have too much debts? Let’s take a look at the state of the world’s debt – Government Debt By Country.
Image source: visualcapitalist.com
Who has the most debts?
Japan has the highest debt to GDP ratio. It’s at nearly 260% versus GDP. One reason is because the government is the one trying to push for GDP growth in the country. The private sector may not have invested enough. Meanwhile the people may also not be spending their money and if this is the case, then there would be no GDP growth. Thus, the government has to do something about it. Thus, they borrowed money and they spend the money to boost the economy. I think we can trust that the Japanese government really did spend all the money on their economy. Standard & Poor’s credit rating for Japan stands at A+ with stable outlook. (info as at 24th February 2022 via google)
Why is Singapore’s debt higher than Malaysia?
One of the key reasons that Singapore decided to raise debt was to encourage the creation of a debt market in the country. This market enabled Singapore to develop as an international finance hub and enhance the country’s attraction to international banks. Source of this explanation: commodity.com. Standard & Poor’s credit rating for Singapore stands at AAA with stable outlook. (info as at 24th February 2022 via google)
Malaysia’s total debt is just 71% but government debt is high and this continues to be a drag because Malaysia also does not have a progressive tax anymore. GST has been abandoned. In order to reduce the total debt vs GDP downwards, the GDP growth just have to be way faster than the debt growth… Standard & Poor’s credit rating for Malaysia stands at A- with negative outlook. (info as at 24th February 2022 via google)
Happy learning.
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