Thursday, March 25, 2010

How Good and Bad Countries Are: Global Country Debt as Percentage of Tax Revenue

The media and blogs worldwide discuss much about debt as a percentage of GDP. However, GDP does not tell the whole story. GDP is reported differently by each country (for example China 's is quite a different). Debt should be issued against the ability of the borrower to pay back, which is in direct relation to its tax revenues in the case of countries, not GDP. GDP can be quite irrelevant.

A better measure may be debt as a function of tax revenue.

Here are the top countries, ordered in decreasing order of public debt as percentage of tax revenue, plus some countries of interest such as Greece, Portugal, Ireland, Chile and Argentina.

The worst is Japan, at 601.1%, followed by Mexico at 339.2%, Greece at 244.3%. The U.S. is 6th at 144.7%.

Best among industrialized nations is Australia at -39%.

Note the outstanding performance by Chile at -47%.

(please click to enlarge)

Disclaimer. This refers to public debt, not gross debt. It does not include states and municipalities, for example. The data is obtained from several sources including wikipedia, OECD and Trading Economics, and it includes approximations and estimates. Besides, published data is revised all the time and some countries report it in different ways. China's and Russia's are cases that require extra checking.

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