The Debt to GDP ratio is a global index that measures the ratio of government debt to its GDP. Public debt is generally considered to be a safe way for foreigners to invest in the country’s growth by buying government issued bonds.
Public debts attract investors who are afraid of taking big risks. When debts are used correctly, they can positively impact the living standard of the country, because it allows the emergence of investment projects in the country, such as infrastructure development, and other projects. This encourages investors to spend instead of saving and promote economic growth.
In terms of debt-to-GDP ratios, Saudi Arabia was the least of the G20 countries in 2016. Their debt-to-GDP represented 13.1% of the total Saudi GDP, followed by Russia with 17% and Indonesia with 27.9.
Turkey came 4th in terms of the lowest ratio of government debt to GDP, by 28.3%, followed by the fifth place, “South Korea” by 38.6%, Australia (41.1%), China (46.2%), Mexico (47.9%), South Africa (51.7%). Argentina ranked second with 69.2%. Germany ranked second with 68.3 per cent. Brazil and India came after with 69.5%.
The countries with the highest debt-to-GDP ratio were Japan, with 250%, Italy with 133% and the United States with 106%. The degree of risk in a given economy is measured by comparing the public debt with the GDP of that country, using GDP as an indicator of the health of the economy and the extent to which the country can repay its debt.
Saudi Arabia’s debt to GDP ratio was 25.8 percent at the end of 2006, however they managed to reduce the ratio in the following year to 17.1 percent, then 8.5 percent by the end of 2010 and then to 1.6 percent by the end of 2014 which is the lowest percentage recorded by a G20 country in the last 10 years.
Public debt can have a positive impact on state governments and could be used as a way of obtaining additional funds to invest in the economy. High public debt rates have a big impact on the economy, driving the GDP up and keeping interest rates low.