The number of countries deemed poor – or in United Nations parlance “developing” – are considered to be 48 by the same UN’s definition and located mostly in Sub-Saharan Africa. Discussions abound in conference after conference about the ways that the UN ought to stick it to the rich countries by getting them to shell out more and more aid money and “forgive” debts. Castigation abounds for those hapless developed countries comprising the Development Assistance Committee (DAC) of the OECD that do not fork over 0.7 percent of their annual Gross National Income in foreign aid.  

But which country is not indebted? And which countries are the most indebted? While Greece and Italy have been raked over the coals for having accumulated indebtedness that exceeds their economic output, they are not alone.

A debtors list does exist. It is compiled annually by the World Economic Forum in Davos in its flagship publication “The Global Competitiveness Report.” The latest issue contained a compilation of government gross debt-to-GDP ratios for 132 countries for 2008. By this compilation, only Timor Leste had zero debt. The “very indebted” were many – there is no official definition of how much debt is too much debt – and they were a mixed kettle of fish: rich and poor countries. What stood out was that only six countries had a ratio of debt to GDP that exceeded 100 percent, three developed countries and three developing countries. Besides Greece and Italy, the other four are Jamaica, Burundi, Zimbabwe, and Japan.  

Yes, Japan was the most indebted country in the world in 2008. As the accompanying table indicates, on the basis of this indicator Japan was worse off than, of all places, Zimbabwe! Moreover, Japan’s ratio of 196% rose to at least 219% last year according to the International Monetary Fund and is projected to rise further. 

Is it fair to ask Japan to write off debt of other countries owed to it? Should Greece itself, a developed country and member of DAC, which is skirting with default, ask for “forgiveness” – and throw global markets into a further tizzy?  

In the 1990s Japan tried to shore up zombie banks, stimulate its economy out of the doldrums and lost its way trying. With little growth to show, the spending trend continued beyond the year 2000 and the debt to GDP ratio doubled in just over a decade. 

In the poor countries debt is seen as an obstacle to development. Debt is considered too high when it has to be repaid – but not enough when it is disbursed. Hardly anyone asks: “How was the money spent?” 

While the indebtedness of developed countries is tracked and analyzed, there is much less accountability regarding debt of developing countries. The UN focuses on eradicating poverty by 2015 in accordance with its “Millennium Development Goals” adopted in 2000. In 2005 the Group of 8, the World Bank and the IMF all decided to pitch in to reduce developing country indebtedness to “sustainable levels.” Sustainable? “For how long?” was always the response of Wall Street wags! Another UN summit in September will produce more exhortations. 

Clamoring for debt relief for the poor by the rich seems incongruous when the most indebted is one of the richest countries while one of the poorest has no debt at all.  

Government gross debt as percent of GDP in 2008:Countries with indebtedness exceeding 100%

Country       Percent
Greece         101   
Italy            106
Burundi       127
Jamaica       128
Zimbabwe    189      
Japan          196  

Source: World Economic Forum, “The Global Competitiveness Report 2009-2010.” 

Vincenzina Santoro is an international economist and represents the American Family Association of New York at the United Nations.

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