What does data tell us about debt of high income and developing countries?

Since the global financial crisis of 2008, analysis and discussion of debt has taken center stage in economic and fiscal policy, especially in high income countries. Working closely with the IMF and other partners, the World Bank maintains two quarterly databases that provide useful information on external and public sector debt of many countries. What does the statistical data from the QEDS and PSD databases tell us about trends in debt levels of some high income and developing countries?

One feature worth noting is that while some high income countries have increased both domestic and external debt levels as part of their crisis management strategies, debt stock levels of some developing countries have barely risen. The chart below illustrates that when debt levels of some countries are compared to their GDP, selected high income countries are far more heavily indebted than some large developing countries.

Note: GDP in Current US$ (data.worldbank.org/indicator/NY.GDP.MKTP.CD)

The World Bank-IMF Quarterly External Debt Statistics (QEDS) database shows that in the first half of 2012 external debt to GDP for selected high income countries has increased to levels experienced in 2009. For instance, at the end of the second quarter of 2012:

• Portugal and Greece had external debt to GDP ratios above 200%, with Greece showing a marked increase in the first half of 2012 compared to 2011, while
• the United States external debt to GDP ratio level has been slightly above 100% since 2011.

Some developing countries, on the other hand, have experienced a stabilization of their external debt to GDP levels since 2010, with the exception of Mexico. For example, at the end of the second quarter of 2012:

• Turkey had an external debt to GDP ratio of 41%,
• Russia’s external debt to GDP ratio was at 29%, and
• China had the lowest ratio at 9.5%.

Public sector debt is composed of both domestic and external debt. In recent years, many governments in both high income and developing countries have been increasing the proportion of their borrowing in their domestic markets. This is particularly noticeable in more advanced emerging markets, where in some cases domestic debt significantly exceeds total external debt levels. Looking at data from the World Bank-IMF Quarterly Public Sector Debt Statistics (PSD) database you can see, for example, that:

• Spain’s proportion of domestic debt has been rising steadily over the past few years and now represents about 70% of general government public debt, while
•  Brazil’s domestic debt accounts for about 86% of total general government public debt,
• on the other hand, the United States and Mexico’s proportion of domestic debt has been gradually declining over the past years as more debt is procured externally. 

General Government Public Sector Debt  - selected high income and developing countries

The Quarterly External Debt Statistics (GDDS, SDDS) and Public Sector Debt databases are freely accessible as part of the World Bank’s Open Data initiative.