Estonia has the lowest debt to GDP ratio in the European Union – 8.7 per cent – according to the EU statistics office, Eurostat.
The statistics office said that at the end of 2017, the lowest ratios of government debt to GDP were recorded in Estonia (8.7%), Luxembourg (23.0%), Bulgaria (25.6%), the Czech Republic (34.7%), Romania (35.1%) and Denmark (36.1%).
Fifteen EU member states had government debt ratios higher than 60% of GDP, with the highest registered in Greece (176.1%), Italy (131.2%), Portugal (124.8%), Belgium (103.4%), France (98.5%) and Spain (98.1%), Eurostat said in a statement.
When it comes to government surplus or deficit, the picture isn’t that rosy. Estonia may have one of the lowest government deficits in the EU (-0.4%), but 13 countries in the 28-member bloc, including one of Estonia’s Baltic neighbours, Lithuania, were running a surplus in 2017.
In 2016, Estonia had a 0.3% government deficit, but in 2015, the country had a 0.1% surplus, and in 2014, the surplus was even 0.7%.
The lower debt to GDP ratio, the lower the risk
The debt-to-GDP ratio is the ratio of a country’s public debt to its gross domestic product (GDP). By comparing what a country owes with what it produces, the debt-to-GDP ratio indicates its ability to pay back its debts.
A high debt-to-GDP ratio may make it more difficult for a country to pay external debts and may lead creditors to seek higher interest rates when lending.
Cover: Estonia’s piggy bank (the image is illustrative/Shutterstock).