Debtor Nation

A debtor nation, by definition, is a country with a negative net payments balance, i.e. it owes more money to other nations than it has in its overall transactions and gross domestic product.

The biggest debtor nations of the world as of 2018 included: Japan, Greece, Portugal, and Italy, with the United States coming in 8th after flirting with the top 3 in previous years.

This is due to the increase in GDP, lower unemployment, and greater entrepreneurism. In general, debtor nations have a negative balance of trade internationally (they buy more than they sell) and do not have sufficient domestic production to meet demand (cheaper labor in other countries has prompted many U.S. companies to outsource manufacturing, a trend that has reversed since 2017).

The amount of debt vs. the GDP of a nation is the criteria used for determining the degree of a country’s debtor nation status, so even though the U.S. has $20 trillion in outstanding debt, its GDP is applied against that figure.

To paraphrase a Wall Street maxim and apply it to debtor nations: “If Ghana owed $20 billion to Germany, Ghana might have a problem. If they owed $20 trillion to Germany, Germany would have a problem.”