International comparisons of national debt

Guy Woods, Statistics and Mapping Section


Around the world the budgetary response to the Global Financial Crisis (GFC) has significantly increased the level of government debt.

The economic recession the GFC precipitated has reduced government revenues. For example, in Australia, Treasury cut its forward estimate for taxation revenue in the 2008–09 budget by $110 billion in the latest budget.

At the same time, the state take-over of collapsing financial institutions, increases in welfare payments to the unemployed and economic stimulus packages have increased the expenditure side of the ledger. This has brought about an increase in public debt levels not seen in some countries since the 1940s.

Measuring debt

In terms of measuring public debt (sometimes referred to as national debt) there are two key indicators that analysts focus on. The first is gross debt, which is, essentially, the sum of all interest bearing loans with a specified repayment date. In Australia this is mostly government securities on issue. The other measure is net debt, which is gross debt less financial assets, such as the holdings in the Australian Future Fund. These measures are usually expressed as a percentage of gross domestic product (GDP).

International comparisons usually focus on gross debt as this is easier to calculate on a comparative basis. A comparison of net debt is much harder due to the way different governments define financial assets. However, analysts at the International Monetary (IMF) have recently calculated estimates for both these indicators for a wide range of countries. It should be noted that most countries in the IMF survey include debt from all levels of government, whereas the Australian data only looks at central government debt.


The IMF data shows that Australia has the lowest level of gross debt, after Chile, when compared with other member states in the Organisation of Economic Development and Co-operation (OECD). In terms of net debt, only Chile, Denmark, New Zealand, Norway and Sweden have lower levels.

Over the course of the GFC Australia’s net debt position went from a low of minus 3.8 per cent of GDP in 2007–08 to a projected high of 6.0 per cent in 2012–13. In comparisons, the average in the G7 countries (Canada, France, Germany, Italy, Japan, United Kingdom and United States) went from a low of 53.0 per cent in 2007 to projected 94.2 per cent in 2015. By 2015, Japan’s net debt is projected to reach 154.7 per cent of GDP, America’s 85.5 per cent and the United Kingdom’s 83.9 per cent.


The IMF is urging the high public debt developed nations to reduce their net debt to levels of 60 per cent of GDP. Without this fiscal adjustment it has warned that they face adverse macroeconomic consequences. IMF research has found that if the G7 countries do not take measures to rein in their debt levels their interest rates could rise by two percentage points and potential growth could be half a per cent lower. This could also have a detrimental impact on the world economy and affect even low debt countries such as Australia.


In sum, Australia has negligible levels of debt (see graph) which pose little threat to the country’s economic outlook. However, Australia could be affected by the international implications posed by the G7.

General government net debt 2010 - Text version

General government net debt 2010

Excludes Norway, Sweden and Chile which have negative net debt.
(a) Australia refers to financial year 2009–10. Figures from 11 May Budget.
Sources: International Monetary Fund, Fiscal monitor: navigating the fiscal challenges ahead, 14 May 2010;
and Treasury, Budget strategy and outlook, Budget paper no. 1, 2010–11.

Library publications and key documents

Australian Government, Budget strategy and outlook, Budget paper no. 1, 2010-11, Commonwealth of Australia, Canberra, 2010.

C Cottarelli and A Schaechter, Long term trends in public finances in the G-7 economies, International Monetary Fund (IMF) staff position note no. SPN/1013, September 1 2010, Washington, 2010, p. 13 – 14, viewed 6 September 2010,

International Monetary Fund (IMF), Fiscal monitor: Navigating the fiscal challenges ahead, 4 May 2010, IMF, Washington, 2010,

S Kompo-Harms, Commonwealth, state territory gross and net debt 1998–99 to 2012–13, Background note, 7 April 2010, Parliamentary Library, Canberra, 2010,