Global Borrowing Trends: Understanding the Complexities of National Debt Management in 2025

Global Borrowing Trends: Understanding the Complexities of National Debt Management in 2025

High national debt levels can significantly affect citizens. The consequences may include economic uncertainty, currency devaluation, inflation, reduced public services due to austerity measures, and higher interest rates on mortgages and other loans.

By RMN News Service
September 24, 2025

National debt has emerged as one of the most critical indicators used to gauge economic health in the modern world. In 2025, certain countries are borrowing at unprecedented levels, which in turn shapes their economic policies and profoundly impacts citizens. National debt is a multifaceted issue that requires careful management. While borrowing can be utilized to support development and respond to crises, excessive debt levels introduce risks to economic stability and citizen welfare.

The World’s Top Borrowers

An analysis of national debt levels in 2025 reveals the top ten countries based on the sheer volume of debt. The United States leads the list with a national debt of $32.9T, which constitutes 88.45% of its GDP, translating to $75,852 in debt per capita. Following in the second rank is China, with $15T in national debt, though this represents a significantly lower 12.88% of its GDP and only $1,787 per capita.

Japan holds the third position with $10.9T in debt, characterized by a high debt-to-GDP ratio of 105.59% and debt per capita of $37,502. The United Kingdom and France both report $3.4T in national debt. However, the UK’s debt represents 293.48% of its GDP ($152,271 per capita), while France’s debt is 249.57% of its GDP ($119,450 per capita). Italy is sixth, with $3.1T in debt (118.99% of GDP; $49,635 per capita).

Rounding out the top ten are India, ranking seventh with $3T in debt (16.66% of GDP; $504 per capita); Germany, eighth with $2.8T in debt (144.6% of GDP; $85,266 per capita); Canada, ninth with $2.3T in debt (136.08% of GDP; $76,474 per capita); and Brazil, tenth with $1.8T in debt (63.91% of GDP; $7,056 per capita). The strategic use of debt is exemplified by Germany’s 2026 draft budget, which allocates significant funds to both defense and investments.

Debt Financing and Allocation

Sovereign debt is primarily financed through various sources. These include domestic and foreign investors, such as insurance companies, pension funds, and banks. Bilateral creditors, which are other governments like China and the U.S., also provide financing. Additionally, multilateral institutions like the World Bank and the International Monetary Fund (IMF) contribute funds, frequently imposing conditions for economic reforms.

Governments typically allocate these borrowed funds to support several key areas. These uses include infrastructure projects (such as public facilities, bridges, and roads), social programs (including welfare, education, and healthcare), and economic stimulus designed to counteract downturns or crises. A significant portion of borrowed funds is also directed toward debt servicing, which involves paying interest on existing obligations.

Repayment Challenges and Management Strategies

Sovereign debt repayment terms are subject to variation. When governments engage in domestic borrowing, the obligations are often shorter-term and carry higher interest rates. Conversely, foreign borrowing involves loans denominated in foreign currencies, which introduces exchange rate risks. Loans secured from the IMF or World Bank commonly mandate structural reforms or austerity measures. Managing this debt landscape is complex, as evidenced by France, which has faced downgrades in its debt ratings due to fiscal challenges.

While governing without debt is theoretically possible, it remains difficult in practice. This difficulty stems from the need for large-scale infrastructure investments, participation in global markets, and the necessity of economic stimulus during downturns. Certain stable economies, such as Switzerland, manage to maintain low debt levels through careful fiscal management.

To reduce national debt, governments can implement several strategies. These include controlling public spending and improving efficiency, enhancing revenue collection efforts while reducing tax evasion, promoting economic growth to increase tax revenue, and engaging in debt restructuring with creditors to either reduce interest or extend repayment terms.

Impact on Citizens and Future Concerns

High national debt levels can significantly affect citizens. The consequences may include economic uncertainty, currency devaluation, inflation, reduced public services due to austerity measures, and higher interest rates on mortgages and other loans. In the U.S., growing debt levels have sparked concerns that the increasing interest payments could eventually exceed defense spending, leading to diminished economic opportunities. Navigating the complexities of sovereign debt ultimately relies on strategic planning, transparent governance, and international cooperation.

(This report was compiled by the RMN News Research Desk, published on September 23, 2025. RMN content and news services are managed by Rakesh Raman, a national award-winning journalist and founder of the RMN Foundation.)

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