Here is the list of countries that owe the most to foreign creditors in 2019. The United States leads, followed by the Euro area and the United Kingdom.

Author: Luca Ventura

With great external debt comes great responsibility. Countries resort to foreign borrowing to maintain financial liquidity and stimulate growth. For rich nations facing a downturn, taking a loan at low interest rates can be more desirable the raising taxes. For emerging nations, this kind of financing is even more essential to cover for domestic resource gaps and pay for programs that can help reduce poverty and foster longer-term growth. There is, however, a well-known problem with debts: borrowing money is easier than paying it back.

"Debt is like any other trap," the 19th century American author Josh Billings has said: "Easy enough to get into, but hard enough to get out of." How hard? To the extent that there is no such thing as zero external debt, and both the most and the least-developed countries in the world alike (and all those in between) today struggle more than ever under the burden of what they owe. According to estimates of the Institute of International Finance (IIF), the Washington-based global association of the financial industry, overall international borrowing rose to more than $246 trillion in the first trimester of 2019, nearly 320% of worldwide GDP. Simply put, the world borrows over three times more than it produces.

External debt—also called "foreign" or "sovereign debt"—is the total capital that is owed to creditors outside of a country's border. The debtors can be governments, corporations and private citizens; the creditors include governments, commercial banks and international financial institutions such as the International Monetary Fund and the World Bank. High levels of external debt pose greater risks than internal debt because repayments in foreign currency are more exposed to exchange rate shocks.

What can possibly go wrong? The first thing that occurs when you borrow too much and too often is that loans and interests repayments undermine the very purpose for which such loans were taken in the first place: boosting economic productivity. Many economists see the accumulated debt as a tax on the future output of a nation: investments on education, health, infrastructure and the like are discouraged when an ever-growing portion of revenues goes to pay back creditors. A country that lives persistently beyond its means will eventually become unable to make good on its fiscal promises, defaulting on its debt. When that happens, it will find even harder to borrow more money and dig itself out of the crisis. Just ask the Greeks, the Argentinians or the Venezuelans.

Not all default crises, however, are created equal. Poor fiscal responsibility is not the only culprit. Debtors often inherit the faults of their fathers,  as when loans incurred by governments and regimes no longer in power fall to a subsequent administration. Many countries are also still suffering from the economic impact of colonialism and the misappropriation of their funds and resources, which pose an overhang constraint on growth and development. Many others, often small and already impoverished, will be forced to contract even more debts to pay for the loss of trade, tourism and the destruction caused by climate change, a problem primarily created by greenhouse gas emissions from richer nations. The economic ripples will be felt across entire regions and beyond.

The ballooning external debt in the world's largest economies poses yet a different, and perhaps more immediate and greater in scale, danger. The most indebted nations are, in fact, the richest ones. Accounting for close to half of global liabilities, the top three borrowers in the world are the United States, the European Union and the United Kingdom. While their debt, given these governments' stability and proven capability to pay back those who lent them money, is generally considered risk-free, there are growing concerns about the sustainability of such high level of borrowing, in particular when any shifts in market conditions or a rise in interest rates could make repayments harder to service. The larger is the exposure to cross-border capital flows, the smaller is the ability of a country to withstand external shocks: the contagion effect, if any of these giants would finally show to have feet of clay, would be devastating.

Gross External Debt Position



($ Mil.)

1 United States 20,263,768
2 Euro area 16,723,186
3 United Kingdom 8,491,386
4 France 6,470,490
5 Germany 5,800,945
6 Luxembourg 4,252,684
7 Japan 4,243,568
8 Netherlands 4,238,429
9 Ireland 2,699,739
10 Italy 2,471,611
11 Spain 2,390,372
12 Canada 2,090,761
13 China 1,971,657
14 Switzerland 1,839,892
15 Hong Kong SAR; China 1,633,428
16 Singapore 1,537,397
17 Australia 1,484,182
18 Belgium 1,294,425
19 Sweden 895,862
20 Brazil 697,228
21 Austria 693,685
22 Norway 648,639
23 Finland 628,904
24 India 543,000
25 Denmark 517,447
26 Greece 481,430
27 Portugal 474,952
28 Russia Federation 468,849
29 South Korea 462,062
30 Mexico 457,956
31 Turkey 446,860
32 Indonesia 391,828
33 Poland 352,333
34 Argentina 283,567
35 Mauritius 237,099
36 Cyprus 236,834
37 Malaysia 221,436
38 Czech Republic 194,146
39 New Zealand 190,581
40 Chile 186,697
41 South Africa 180,568
42 Thailand 163,403
43 Saudi Arabia 162,744
44 Hungary 160,462
45 Kazakhstan 158,309
46 Colombia 133,246
47 Ukraine 115,511
48 Slovak Republic 112,797
49 Romania 112,228
50 Egypt 108,699
51 Malta 104,861
52 Israel 98,231
53 Philippines 81,259
54 Peru 66,387
55 Sri Lanka 55,469
56 Morocco 50,770
57 Croatia 50,714
58 Slovenia 49,723
59 Ecuador 49,335
60 Uruguay 41,651
61 Belarus 40,071
62 Latvia 40,003
63 Bulgaria 39,528
64 Lithuania 38,816
65 Tunisia 34,640
66 Jordan 32,237
67 Costa Rica 29,195
68 Estonia 25,087
69 Iceland 19,349
70 Georgia 18,184
71 El Salvador 17,114
72 Armenia 11,473
73 North Macedonia 9,473
74 Kyrgyz Republic 8,290
75 Moldova 7,234
76 Seychelles 5,092
77 West Bank and Gaza 1,682

Source: World Bank's Quarterly External Debt Statistics SDDS, 10/17/19 update.