The number of countries deemed
poor – or in United Nations parlance “developing” – are considered
to be 48 by the same UN’s definition and located mostly in Sub-Saharan
Africa. Discussions abound in conference after conference about the
ways that the UN ought to stick it to the rich countries by getting
them to shell out more and more aid money and “forgive” debts. Castigation
abounds for those hapless developed countries comprising the Development
Assistance Committee (DAC) of the OECD that do not fork over 0.7 percent
of their annual Gross National Income in foreign aid.
But which country is not indebted?
And which countries are the most indebted? While Greece and Italy have
been raked over the coals for having accumulated indebtedness that exceeds
their economic output, they are not alone.
A debtors list does exist.
It is compiled annually by the World Economic Forum in Davos in its
flagship publication “The Global Competitiveness Report.” The latest
issue contained a compilation of government gross debt-to-GDP ratios
for 132 countries for 2008. By this compilation, only Timor Leste had
zero debt. The “very indebted” were many – there is no official
definition of how much debt is too much debt – and they were a mixed
kettle of fish: rich and poor countries. What stood out was that only
six countries had a ratio of debt to GDP that exceeded 100 percent,
three developed countries and three developing countries. Besides Greece
and Italy, the other four are Jamaica, Burundi, Zimbabwe, and Japan.
Yes, Japan was the most
indebted country in the world in 2008. As the accompanying table indicates,
on the basis of this indicator Japan was worse off than, of all places,
Zimbabwe! Moreover, Japan’s ratio of 196% rose to at least 219% last
year according to the International Monetary Fund and is projected to
Is it fair to ask Japan to
write off debt of other countries owed to it? Should Greece itself,
a developed country and member of DAC, which is skirting with default,
ask for “forgiveness” – and throw global markets into a further
In the 1990s Japan tried to
shore up zombie banks, stimulate its economy out of the doldrums and
lost its way trying. With little growth to show, the spending trend
continued beyond the year 2000 and the debt to GDP ratio doubled in
just over a decade.
In the poor countries debt
is seen as an obstacle to development. Debt is considered too high when
it has to be repaid – but not enough when it is disbursed. Hardly
anyone asks: “How was the money spent?”
While the indebtedness of developed
countries is tracked and analyzed, there is much less accountability
regarding debt of developing countries. The UN focuses on eradicating
poverty by 2015 in accordance with its “Millennium Development Goals”
adopted in 2000. In 2005 the Group of 8, the World Bank and the IMF
all decided to pitch in to reduce developing country indebtedness to
“sustainable levels.” Sustainable? “For how long?” was always
the response of Wall Street wags! Another UN summit in September will
produce more exhortations.
Clamoring for debt relief for
the poor by the rich seems incongruous when the most indebted is one
of the richest countries while one of the poorest has no debt at all.
gross debt as percent of GDP in 2008:Countries
with indebtedness exceeding 100%
Economic Forum, “The Global Competitiveness Report 2009-2010.”
Vincenzina Santoro is
an international economist and represents the American Family Association
of New York at the United Nations.