The highest level of government debt relative to GDP as of the fourth quarter of 2017 was Greece (178.6%), Italy (131.8%), Portugal (125.7%), Belgium (103.1%), and Spain (98, 3%).
Eurostat named the EU countries with the largest public debt
The average national debt among the countries of the European Union at the end of 2017 amounted to 81.6% of GDP, while last year it amounted to 83.3%.
This is evidenced by the data of the statistical office of the EU – Eurostat.
The highest level of government debt relative to GDP as of the fourth quarter of 2017 was Greece (178.6%), Italy (131.8%), Portugal (125.7%), Belgium (103.1%) and Spain (98 , 3%).
At the same time, Estonia (9%), Luxembourg (23%), Bulgaria (25.4%), Czech Republic (34.6%) and Romania (35%) had the least debts.
At the end of 2017, the average public debt for all 28 EU countries amounted to 81.6%, and among the countries of the eurozone – 86.7%, according to Eurostat.
European Countries With Most Debt
EU government debt over the past year has shown a downward trend.
The average budget deficit in the EU at the end of 2017 was 1% compared with 1.6% at the end of 2016.
Recall that the EU Maastricht norm sets the state budget deficit at 3% of GDP.
What has the introduction of euro for the management of the state debt given?
The introduction of the euro in 1992-2002 allowed all countries in the eurozone to share financial risks and obtain extremely high credit ratings, which directly affected the cost of their borrowed funds.
According to the classification of Standard & Poor’s, the rating of Greece was defined as “A”, Portugal – “AA-”, and Ireland and Spain it was the highest – “AAA”. And because of such high ratings, the cost of external borrowing for these countries instantly decreased several times in comparison with the current level of national interest rates on the eve of their entry into the eurozone. In November 2007, the interest rate on government long-term bonds of Greece was only 0.34% higher than the corresponding level in Germany, the EU state with the highest solvency.
Long-term interest rates (profitability of the secondary market for government bonds with maturities of up to 10 years) of all eurozone countries. A source
In addition, despite the forecasts made by economists after the introduction of the euro, the asymmetry of economic development in the EU between the most developed and lagging countries only intensified.
Why a debt crisis happened and why Greece has much more than all?
The main factors of the debt crisis in the EU countries were laid down in the Treaty on the Establishment of the European Economic and Monetary Union, signed in Maastricht in 1992. In accordance with the Maastricht criteria, the threshold for the permissible level of public debt (including external and internal) was set at 60% of GDP. At the time of the decision on future members of the European Economic and Monetary Union, this criterion was violated in 11 states. For the period from 2009 to 2014, the total amount of government debt of the euro area countries increased from 70 to 92% of GDP. At the same time, according to the European Commission, in the troubled countries of the euro area, the volume of public debt in 2014 was 2-3 times higher than the established The Maastricht Agreement sets a limit of 60% of GDP, ensuring financial stability: in Greece – 177.1% of GDP, in Portugal – 130.2 and in Italy – 132.1% of GDP.
The growing debt burden combined has led to a large-scale debt crisis in the eurozone.
|Countries with the highest Debt-to-GDP Ratio|
|23.||Congo, Republic of the||83.1%|
|Countries with the lowest Debt-to-GDP Ratio|
|11.||Congo, Democratic Republic of the||17.6%|