Debt Free Countries: Top Nations without National Debt
Many countries around the world are struggling with their increased obligations in the form of debt but have maintained it quite low. A low level of debt shows less reliance on foreign borrowings. The best example can be taken from Hong Kong (it is a one of the debt free countries), whose economy has the least debt to GDP ratio. It is an almost debt free country. It has a well-regulated financial system and large foreign reserves. Its per capita GDP is the highest in the world, around £32,000. Countries with the most debt are Japan, Venezuela, Italy etc. Want to know which countries are debt-free? Here is a list of debt free countries.
Debt
What is Public Debt?
Public debt is defined as the total amount of liabilities which is followed by the government to meet the development budgets of the country. Public debt is generally expressed as the ratio of Gross Domestic Product (GDP). The debt can be raised both in the form of external or internal means. Internal debt includes the debt borrowed within the country, and external debt is the debt that is put to lenders outside the country. Public debt is considered an important source for the government to meet its obligation and fulfil the needs of the economy.
Debt Needs to be Secured
Countries That Have the Biggest Amount of National Debt
According to the IMF (International Monetary Fund), the total amount of debt that is held by the government throughout the world has reached around $164 trillion in 2016. The debt by a country is measured in terms of the debt-to-GDP ratio. The highest debt countries have more obligations than those debt free countries. The countries with the highest debt countries are Venezuela, Japan, Greece, Italy, the USA, France, and the UK.
Debt to GDP Ratio
Debt-to-GDP ratio is measured as a country’s public debt to its GDP (Gross Domestic Product). This ratio indicates the country’s ability to repay its debts. When the debt to GDP ratio is low, it indicates that any economy produces more goods and services and is sufficient to pay back its debt. Higher debt-to-GDP ratio means they would be the highest debt countries and less debt-to-GDP ratio means they will be debt-free countries.
Top 10 Debt Free Countries 2025
The Highest Debt Countries are as Follows:
Below is the debt list of countries. The highest debt countries are Venezuela, Japan, Sudan, Greece, etc.
High Debt to GDP Ratio is a Danger Sign
Increasing public debt is a sign of worry. The research by the World Bank has shown that countries with debt-to-GDP ratios higher than 77% have faced economic slowdown over time. Debt-to-GDP ratio is an indicator of a country defaulting on its debt which may further lead to a financial crisis. The issue of debt has been increasing since the time of COVID-19. In this, the country with no debt is decreasing. With the increasing interest rate, government expenditure will slow down and will cause worry about the sustainability of the debt of the nation. The heavily indebted countries will feel the effect of these financial conditions, which will harm the growth prospects over time. Countries with no debt do not have such danger signs.
Problem with the Less Developed Countries
Countries with the Lowest National Debt
A low debt-to-GDP ratio is considered to be desired, but it does not indicate a healthy economy. These are called debt-free countries. Many developing and stagnant economies have a low debt-to-GDP ratio because both their debt and their GDP are quite low. If a country borrows from another country and invests for economic growth, then, in the long run, the economy could be a healthy economy because of continued learning and increased profit in future. As economic growth is not guaranteed, such a type of following could also be a bank fire, as in the case of Venezuela.
Countries with no debt or the least amount of debt are as follows:
Conclusion
With the increasing amount of debt around the globe, cost increases the risk of default and slow economic growth for the countries. Though with the help of debt, some countries are trying to overcome the slowdown caused by the pandemic lockdowns. Higher debt comes with slow growth potential and increases deficit spending with unpredictable long-term consequences. Countries with no debt have less risk, but they may further suffer in case of development.
FAQs on List of Debt Free Countries
1. What are debt-free countries, and do any truly exist in 2025-26?
A debt-free country is a nation with no or extremely low national debt. In practice, almost no country is completely free of debt. The term usually refers to countries with a very low debt-to-GDP ratio, meaning their outstanding government debt is a tiny fraction of their annual economic output. These nations manage their finances so effectively that their revenue consistently meets or exceeds their spending, avoiding the need for significant borrowing.
2. Which countries are considered to have the lowest national debt?
Several countries are known for their strong fiscal positions and minimal national debt. As per recent economic data, the primary examples include:
Hong Kong: A major financial hub with strong fiscal reserves and a market-driven economy.
Brunei: Its wealth from extensive oil and gas reserves allows the government to operate with very little to no debt.
Timor-Leste: Another nation that benefits from petroleum revenues, allowing it to maintain low debt levels.
Kuwait: A key oil-exporting country with a high revenue stream that helps manage its debt effectively.
3. How do some countries manage to remain nearly debt-free?
Countries maintain low debt levels through a combination of strategies. A primary factor is having a significant source of revenue, often from natural resources like oil or gas (e.g., Brunei, Kuwait). Another key factor is strict fiscal discipline, where the government consistently avoids spending more than it earns. Additionally, having a small population, a stable political environment, and a highly developed, specialised economy (like finance in Hong Kong) contribute to their ability to manage finances without accumulating debt.
4. What is the importance of the debt-to-GDP ratio for understanding a country's economy?
The debt-to-GDP ratio is a crucial indicator of a country's economic health. It compares what a country owes (its debt) to what it produces (its GDP). A lower ratio indicates that the economy is producing enough to pay back its debts without difficulty. Conversely, a high ratio suggests a higher risk of default and can lead to economic problems, as more national income must be diverted to paying interest on the debt instead of being invested in public services like health and education.
5. Is India a debt-free country?
No, India is not a debt-free country. Like most major economies, India has a significant national debt, comprising both internal and external borrowings. The government borrows to finance its fiscal deficit—the gap between its expenditure and revenue. As per the FRBM (Fiscal Responsibility and Budget Management) Act framework, India aims to manage and gradually reduce its debt-to-GDP ratio, which is currently well above the recommended target for developing economies.
6. If being debt-free is ideal, why do most countries, including India, take on public debt?
Governments borrow money for several important reasons that are crucial for economic growth and stability. Public debt is used to:
Finance development projects like infrastructure (roads, ports) and public services (schools, hospitals).
Stimulate the economy during a recession or depression by increasing government spending.
Cover revenue shortfalls without raising taxes excessively, which could slow down economic activity.
Fund emergency responses, such as those for natural disasters or health crises.
Managed properly, debt can be a powerful tool for a country's development.
7. In contrast to debt-free nations, which country has the highest national debt?
When measured in absolute terms, the United States has the highest national debt in the world, exceeding $30 trillion. However, when measured by the debt-to-GDP ratio, countries like Japan and Sudan often rank higher, meaning their debt is much larger relative to the size of their economy. This distinction is important because a large economy can often manage a larger absolute debt more sustainably than a smaller economy.
8. How can a country with a high absolute debt be considered more financially stable than one with a lower absolute debt?
Financial stability is less about the absolute amount of debt and more about the ability to repay it. A country with a large, diverse, and strong economy (like the USA) can sustain a high absolute debt because its capacity to generate revenue (its GDP) is also massive. Its debt might be large, but its debt-to-GDP ratio may be more manageable than that of a smaller, less stable economy. Creditors are more willing to lend to a large, stable economy, believing their investment is safer, which helps in managing the debt.
