10 Countries with Lowest National Debt in 2021

debt for countries

In our personal finance, we are very familiar with the term “debt.” But do you familiar with the term “national debt.” The national debt is related to the public finance of a country and there are many countries around the world that are struggling with national debts. While; there are also other countries with no or lowest national debt. So if you are curious about countries that have managed to keep their debt low then continue reading the article.

The World Economic Forum’s Global Competitiveness Survey maintains the debt ratio of countries around the world and according to the 10 countries with the lowest national debt in 2021 are Brunei, Uganda, Cayman Islands, Afghanistan, Estonia, Egypt, Eswatini, Bhutan, Kuwait, and Burundi.

What is National Debt?

The national debt refers to the total amount of money a country’s government has borrowed. The national debt is also known as public interest, public debt, government debt, sovereign debt, etc. The national debt can be owed to lenders within the country or owed to foreign lenders. The national debt is usually consisting of two types of debts; they are debt held by the public and intergovernmental debt. The public debt is owned by the government to buyers of its bonds. Here the buyers are the citizens of the country, international investors, and foreign governments. On the other hand, the federal government owes an intergovernmental debt to other government departments.

Factors that Impact National Debt Ratings

A nation’s debt ratings can be influenced by quite a few important factors. They are – 

  • Rate of population growth 
  • Distribution of income in the country 
  • Levels of private debt 
  • Value of the housing stock 
  • Rate of homeownership 
  • Country’s trade balance 
  • Annual inward investment in a country 
  • GDP growth

List of 10 Countries with Lowest National Debt in 2021

  1. Brunei
  2. Uganda
  3. Cayman Islands
  4. Afghanistan
  5. Estonia 
  6. Egypt
  7. Eswatini
  8. Bhutan
  9. Russia
  10. Kuwait
Lowest National Debt Countries

1. Brunei

Brunei, officially known as the Nation of Brunei got its independence from the UK in 1984. This country is located on the north coast of Borneo in Southeast Asia and is surrounded by the state of Sarawak, Malaysia. Brunei is a small country with just 5,765 square kilometers of land. The economy of Brunei is supported by exports of gas and oil. The public GDP is also very high, therefore; the national debt is very low for Brunei. The culture and laws in the country are heavily influenced by Islam because more than 66% of the population adhering to Islam. The debt to GDP ratio of Brunei is 2.40%.

2. Uganda

Uganda, officially known as the Republic of Uganda is a landlocked country in East Africa. This country has rich ethnic diversity which makes it one of the most ethnically diverse countries in the region. Uganda’s economy is mostly dependent on coffee, oil re-exports, base metals, and products, first export, maize, cement, tobacco, tea, sugar, hides and skins, cocoa beans, beans, flowers, etc. Since 2015, Uganda is experiencing consistent economic growth which results in Uganda’s highest gross domestic product growth of 4.6 percent in real terms and 11.6 percent in nominal terms. All this economic growth makes Uganda the 2nd lowest country with the lowest national debt and their debt to GDP ratio is 4.00%.

3. Cayman Islands

The Cayman Islands is one of the 14 British Overseas Territories and it is a self-governing territory in the western Caribbean Sea. The economy of the Cayman Islands is mostly dominated by financial services and tourism. Both financial services and tourism accounted for 50-60% of Gross Domestic Product. The average income of the Cayman Islands is US$71,549 and this country has the highest standard of living in the Caribbean. The low population and high average income have helped the Cayman Islands to keep low national debt. The debt to GDP ratio of the Cayman Islands is 5.70%.

4. Afghanistan

Afghanistan is an Islamic country with Muslims account for 99% of the population of Afghanistan. Officially, Afghanistan is known as the Islamic Republic of Afghanistan and it is located within South Asia. Afghanistan has $1 trillion or more in mineral deposits and it is the main support to their economic growth. It is expected that the GDP of Afghanistan will reach 20.46 USD Billion by the end of 2021 and the GDP per capita will reach 570.00 USD by the end of 2021. Agricultural products and natural resources are the backbones of Afghanistan’s economy. The natural resources of Afghanistan include coal, copper, iron ore, lithium, uranium, rare earth elements, chromite, gold, zinc, talc, barite, sulfur, lead, marble, precious and semi-precious stones, natural gas, and petroleum. All these resources help the rapid growth of Afghanistan’s economy. Afghanistan has a debt to GDP ratio of 7.10%.                   

5. Estonia 

Estonia is a country in Northern Europe and officially it is known as the Republic of Estonia. Estonia consists of the mainland and 2,222 islands on the eastern coast of the Baltic Sea. Estonia is a developed country, with a high-income advanced economy. In fact, Estonia ranked very high in the Human Development Index. Estonia is also a member of the European Union and is considered a high-income economy by the World Bank. The GDP in Estonia is expected to reach 28.00 USD Billion by the end of 2021 thanks to its strong economic foundation. Therefore, Estonia had the lowest ratio of government debt to GDP among EU countries and it is ranked 5th among the countries with the lowest government debt in 2021. Estonia has a debt to GDP ratio of 8.40%.

6. Egypt

Egypt is located in the northeastern corner of Africa. This country is officially known as the Arab Republic of Egypt and the ethnic Egyptians account for 91% of the total population. The economy of Egypt is very strong and it mainly depends on agriculture, media, petroleum imports, natural gas, and tourism. Egypt also receives United States foreign aid since 1979 and it is the 3rd largest recipient of such funds from the United States. Since 2012, the economic conditions of Egypt have started to improve considerably and they ranked 6th as a country in the world ranking in terms of the lowest national debt.

7. Eswatini

Eswatini, officially known as the Kingdom of Eswatini is a landlocked country in Southern Africa. In English, Eswatini is known as Swaziland where the head of the state is a king. Eswatini is one of the smallest countries in Africa but they have a strong financial condition thanks to the diverse agricultural and natural resources. Agriculture, forestry, and mining accounting for about 13% of GDP while textiles and sugar-related processing represent 37% of GDP. The debt to GDP ratio of Eswatini is 10.75%.

8. Bhutan

Bhutan is a small country located in South Asia at the end of the Himalayas. Officially it is known as the Kingdom of Bhutan. Bhutan has a population of over 754,000 and a territory of 38,394 square kilometers. Bhutan’s economy is one of the world’s smallest economies but it is a very strong one. Over the years the economy of Bhutan has grown rapidly and it has the second-fastest-growing economy in the world, with an annual economic growth rate of 22.4 percent. According to Trading Economics global macro models and analysts expectations, GDP in Bhutan is expected to reach 2.20 USD Billion by the end of 2021. The high GDP means Bhutan only has an 11.00% debt to GDP ratio.

9. Russia

Russia or the Russian Federation is a country located between Eastern Europe and Northern Asia. Russia is the largest country in the world with an area of over 17 million square kilometers. It has a population of 146.2 million and it is the 9th most populous country in the world. Russia has a mixed economy with enormous natural resources, particularly oil and natural gas. Russia has the world’s eleventh-largest economy by nominal GDP where the service sector contributed to 62% of the total GDP. On the other hand, the industrial sector contributed 32%, and the small agricultural sector contributed roughly 5%. The strong economy of Russia ensures it has low public debt, therefore; the debt to GDP ratio of Russia is 12.20%.          

10. Kuwait

Kuwait, officially known as the State of Kuwait is a country located in Western Asia. The country has 17,820 square kilometers of land with a population estimated at 4,266,651. Historically, Kuwait was a highly strategic trade port between Mesopotamia and India and it plays a very important role in the economic growth of Kuwait. However, the economy of Kuwait is mostly petroleum-based and it makes Kuwait one of the richest countries in the world. Moreover, the Kuwaiti dinar is the highest-valued unit of currency in the world and they are the 5th richest country in the world by gross national income per capita. The debt to GDP ratio of Kuwait is 14.80%.

Final Thought

The national debt is an indication of the financial stability of a country. However, having low national debt doesn’t always mean a country has a stable and strong economy. Sometimes it also indicates that the economy of a country is so bad that no one wants to lend money to them.                         

Last Updated on August 7, 2021 by Magalie D.

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