Top 10 Countries in the Red

Public debt as percentage of GDP: 82

Population: 65 million

Parlez-vous global recession? France is taking a crash course in global recession 101 as it struggles to maintain its prized AAA credit rating and help support the European Union's interconnected banking system. So far, the Gallic government has yet to start writing checks that it can't cash, and economic forecasts predict that its debt-to-GDP ratio will halt before it reaches 90 percent [source: Reuters]. Whether that will hold, however, largely depends on how the European Union (EU) weathers the financial crisis as a whole. For instance, if the Greek financial system collapses, France and Germany may have to toss out a life raft in the form of public funding from their own coffers.

In an effort to remain fiscally stable, France has instituted public spending cuts and is working toward a projected 2 percent economic growth in 2011 [source: Reuters]. However, the country must also address its massive private sector debt, which hovers around 150 percent of the GDP [source: The New York Times].

Public debt as percentage of GDP: 93

Population: 10.7 million

Portugal comprises the "P" in the PIGS acronym, which economists batted around when the global recession began taking its toll on the EU in 2009. Portugal, Ireland, Greece and Spain were lumped together derisively as the cluster of nations with the largest and most malignant debt obligations [source: BBC]. An EU member since 1986, Portugal has lagged behind other member nations' GDP performance in recent years and likewise attracted criticism for its mounting public debt. Unable to save itself, Portugal received a $110 billion bailout package from the EU in May 2011. Of course, bailout cash doesn't come for free. In exchange for the rescue effort, Portugal instituted deeper pay cuts and hiring freezes for the civil sector, stalling infrastructure improvements to its airport and high-speed rail line as well [source: Tremlett]. Economists' fingers remain tightly crossed that Portugal doesn't need a second handout anytime soon, which could have a violent ripple effect far beyond its borders.

Public debt as percentage of GDP: 96

Population: 4.6 million

Ireland is a somewhat surprising country to have succumbed so quickly to the financial crisis. It was, as mentioned on the previous page, part of the PIGS economic outcasts. However, Ireland's GDP far outpaced its public debt until 2008, when its market suddenly slipped into fiscal quicksand [source: Dumain and Rapp]. In 2007, government debt accounted for a mere 11 percent of the Irish GDP, and as of this writing, that percentage is projected to hit 107 in 2013 [source: The New York Times].

What explains the perilous jump into indebtedness? In 2007, Ireland's private sector debt had already exceeded 240 percent of the GDP, so when recession struck, the banks couldn't cover their expenses, triggering a government bailout [source: Norris]. This, in turn, resulted in a spike in public debt. For that reason, Ireland is a prime example of why judging a nation's financial solvency based solely on sovereign debt is more of a crapshoot than a calculation.

Public debt as percentage of GDP: 119

Population: 61 million

What's a sure sign that all is not right in the EU? The EU country with third-largest economy is being downgraded left and right by credit-rating agencies. Since spring 2010, the Italian government has hacked away at its nearly $2 trillion in debt, but many financial analysts have doubted that the austerity measures the country has taken will make a significant enough dent [source: McGovern]. As a result, Italy received a heaping helping of bad news about its bottom line in October 2011. Following suit with Standard & Poor's, credit-rating agencies Moody's and Fitch slashed the nation's credit worthiness scores, suggesting that Italy isn't moving out of the red any time soon [source: Winfield]. The lower the rating, the more it costs to borrow money, wedging Italy deeper into its debt problem. Perhaps taking a cue from the United States, Italy has courted China for financial support [source: Dinmore]. Although the G-8 nations (eight highly industrialized countries -- France, Germany, Italy, Great Britain, Japan, United States, Canada and Russia -- which meet annually about global issues) have struggled to keep their economies above water in recent years, Beijing has barely batted an eyelash.

Public debt as percentage of GDP: 126

Population: 311,000

Although this Nordic country is far from being out of the red, the credit-rating agency Fitch upgraded its economic forecast from grim to stable in the spring of 2011 [source: Iceland Review]. That might seem like a negligible shift, but considering how far Iceland has come since the global recession threatened to sink its economy (40 percent of Iceland's exports are related to its fishing industry), the upgrade is actually pretty significant.

The first thriving nation to request a financial bailout from the International Monetary Fund in 2008, Iceland received billions in loans after three of its major banks collapsed [source: Chakrabortty]. In a dramatic twist, the Icelandic people voted against repaying a $5 billion loan from the British and Dutch governments -- not once, but twice. Rather than saddling Iceland's recovery economy with more public debt, which is the typical approach, the pressure is now on the crippled bank Landsbanki to pay the piper [source: The Telegraph]. And if the Fitch upgrade is any indicator, turning economic convention on its head like that may have been the wisest way to go.

Public debt as percentage of GDP: 62

Population: 311 million

Don't let the numbers fool you. The United States doesn't rank in the top 10 countries with the largest public debt as a percentage of GDP, but that doesn't mean it's in the clear by any means. The United States owns the largest amount gross external debt (public and private debt combined) in the world. The nation's whopping $14 trillion -- and growing -- tab has eaten away at the GDP income at an escalating rate in recent years. And though the U.S. Congress barely dodged defaulting on its loan repayments in August 2011, the Standard & Poor's credit-rating agency nevertheless downgraded its credit from the coveted AAA status to the notch below, AA+[source: Goldfarb]. On a more positive note, household debt in the United States inched downward in 2011 [source: Lahart and Light]. The change wasn't dramatic, but when the economic climate is so grim, it seems like every little bit counts.

Public debt as percentage of GDP: 234

Population: 12 million

The African nation's financial woes aren't breaking news, since they trace back much farther than the beginning of the recent global economic recession. Following years of economic decline that began in earnest in the 1990s, Zimbabwe now has the largest debt-to-GDP ratio in the world. In fact, the government quit recognizing it as legal tender in 2009 due to hyperinflation, rendering the Zimbabwean dollar virtually worthless [source: UPI].

Despite numbers that might indicate otherwise, Zimbabwe appears to be on the road toward financial recovery. In 2010, the nation experienced 5.9 percent economic growth [source: CIA]. However, it seems that much work remains to rectify Zimbabwe's legacy of political and social instability, warfare and unemployment.

Public debt as percentage of GDP: 185

Population: 50,300

This two-island country in the Caribbean has one of the worst debt-to-GDP ratios and gross national debt totals on the planet. Those fiscal problems are compounded by its tiny population, since the smaller the pool of residents a country has, the fewer people there are to share the debt burden. A tropical destination with an economy that revolves largely around tourism, Saint Kitts and Nevis and its Caribbean neighbors have taken a major hit as recession-parched budgets have put a damper on people's vacation plans. In 2008, Hurricane Omar also destroyed a lucrative resort, adding insult to fiscal injury [source: International Monetary Fund]. To assist the struggling country out of financial ruin, the IMF approved an $84 million three-year loan to help restructure Saint Kitts and Nevis' teetering debt load and cut public spending.

Public debt as percentage of GDP: 197

Population: 127 million

First, a housing market crash in the '90s took a bite out of the Japanese economy. Then, there were the earthquake and tsunami natural disasters, followed by the Fukushima nuclear power plant explosion in March 2011. The World Bank estimated recovery costs from the triple punch reaching up to $235 billion [source: Economist]. Long story short, these aren't exactly the salad days for the island nation.

Although Japan and the United States are both trillions in the hole, their debt scenarios are entirely different. First, the American debt load represents roughly 62 percent of its GDP, less than a third of Japan's debt ratio. And unlike the U.S. economy that has borrowed heavily from foreign investors, with an $850 billion IOU to Japan alone, the eastern ally has borrowed a boatload of money from itself [source: Dumaine and Rapp]. The Japanese government carries an enormous public debt, whereas its household debt and external debt loads are far more stable [source: Economist].

Public debt as percentage of GDP: 142

Population: 11 million

A legacy of exorbitant public spending following its entrance into the European Union in 1981 has landed Greece in the undesirable position of the most cash-strapped economy [source: BBC]. Since the country received its first economic bailout in May 2010, Greece's financial woes have only worsened. Failing to meet spending cuts and repayment timelines built into the bailout, the country's credit rating has taken a beating, making it more costly for them to borrow any money to help them weather their financial crisis, further handicapping the government. The Standard and Poor's credit-rating agency has named Greece the "least credit-worthy" country on its books [source: BBC]. That pitiful credit rating pushed it a notch beyond Japan, which has more debt to pay off, but hasn't received such severe credit downgrades.

Additional proposed government spending cuts and widespread unemployment have only stirred civil unrest, which has manifested as strikes and rioting. To make matters worse, analysts predict that Greece's economy will sink even lower before a possible recovery takes place [source: Economist].