Every governments has an obligation to raise the living standard of their populace. Usually they fund this via taxes, but often taxes aren’t sufficient to meet essential expenditures in the short term, so government may resort to borrowing but keeping such debt at low levels could prevent economic instability. Countries with low to medium level debt have seen investors gain confidence, leading to lower bond yields and putting least pressure on the government to cut spending. Countries with lowest debt have not to respond by printing money that leads to inflation in the country.
Low government debt has a positive effect on long-term economic growth, saddling future generations with low debts of today and frees economic resources for investment in the private sector. Additional government spending today harms economic growth of country in the long term, while budget cuts today would enable the economy to grow much faster tomorrow. So for saving future generations from larger tax burden, today’s debts should be kept lowest that leads to expansion of private investment in future.
How much the national debt of any country is detetmined by comparing it with GDP . National debts of the entire state, including the debt associated with central government, the provinces, municipalities, local authorities and social insurance. Every year, the debt data is extracted by EuroStat, IMF and CIA which is collected from various surveys and activities conducted by these organizations. As per 2015 statistics, Liberia is the country with the lowest national debt of about 3.3 percent of the GDP. The statistic shows the 20 countries with the lowest national debt in 2015 in relation to the gross domestic product (GDP).
|Rank||Country||National debt in relation to GDP|
|1||Hong Kong SAR||0.06%|
|18||United Arab Emirates||18.86%|
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