The debt-to-GDP ratio measures how much a country's national debt compares to its gross domestic product (GDP). It is calculated by dividing the national debt by GDP and multiplying by 100. This ratio helps assess a country's ability to repay its debts based on its economic output.
Related terms
Gross Domestic Product (GDP): This term refers to the total value of goods and services produced within a country's borders in a given time period.
External Debt: It represents the portion of a nation's total borrowing that is owed to foreign lenders or institutions outside its borders.
Credit Rating Agency: These agencies assess the creditworthiness of countries and assign them ratings based on their ability to repay debts.