Debt-to-GDP Ratio

(redirected from Debt GDP Ratio)

Debt-to-GDP Ratio

A ratio of a country's national debt to its GDP. The debt-to-GDP ratio is one way to estimate whether or not a country will be able to repay its debt. The higher the ratio is, the more likely a country is to default because its government has borrowed too much relative to the ability of the country as a whole to repay. This may affect the country's sovereign credit rating. However, this ratio is not the only metric used. For example, the United States and the United Kingdom maintain national debts that approach 100% of GDP, but both have AAA credit ratings because the political risk in both countries is very low.
References in periodicals archive ?
And with America's government debt approaching 80% of GDP, and most of Europe touching or exceeding the 100% mark, what arguments can there possibly be against us taking the debt GDP ratio to a comfortable 35%, or 40% or even 60% if we want to.
It will be politically difficult for the Government to cut spending, but a tighter approach to procurement could go some way to plug the pounds 60bn of public spending cuts we estimate will be required to stabilise Britain's debt GDP ratio by 2016.
And lastly, the convergence of debt GDP ratio during 1985-2004 of the members of SACU was calculated on the basis of the estimated equation between [beta] coefficients of trend line of debt GDP ratios and the five year average values of debt GDP ratios of the members.
We can show the debt GDP ratio of SACU in the Figure No-6, plotted below.
The author calculates the maximum rate of interest on external borrowings Pakistan could have afforded in the past to maintain a steady-state situation of the external debt burden, that is, a constant debt GDP ratio.