Which Countries Have No National Debt? Revealing the Debt-Free Nations

Picture this: a world where governments don’t owe money to anyone. Not to other countries, not to banks, not to international lenders. Sounds unreal, right? Yet, the idea of a debt-free country floats around the internet, especially when headlines scream about ever-growing national debt. But is there actually any country that doesn’t have to worry about loan repayments or interest piling up? Turns out, this is way more complicated—and stranger—than it might seem at first glance.

The Search for Debt-Free Countries

If you check out the most recent data (like the World Bank’s global debt database from 2024 or the IMF’s latest reports), almost every country you can think of—big or small—owes money. The global economy simply runs on borrowing. Governments issue bonds, take loans, and finance their growth through debt. So what about the unicorns—the countries that don’t owe a dime?

Let’s start with an honest fact: most countries, even the richest ones, hold debt. The United States, Japan, and much of Europe top the charts with eye-watering numbers. For example, as of 2024, Japan’s government debt sits at over 250% of its GDP. The U.S. debt-to-GDP ratio has crossed 120%. Even countries famous for being thrifty, like Germany or Switzerland, have debt ratios above 30%.

But, if you squint hard enough at world economic tables, you might spot a couple of anomalies: places like Liechtenstein, Brunei, or Palau. For a while, these tiny countries sometimes reported zero or near-zero external government debt. But is that the same as “no debt at all?” Not really, and here’s where things get tricky. Some microstates and very small nations have either not reported public debt figures, or their budgets are so small, and their economies so unique, that they don’t rely on borrowing in the same way big economies do. Instead, they run balanced budgets or use giant sovereign wealth funds (like Brunei and its oil money) to cover expenses without loans.

There are also a handful of countries—think of certain Gulf states or wealthy city-states—that have held public debt at basically 0% for short periods, usually thanks to huge natural resource exports. But this is rare. Even oil-rich spots like Saudi Arabia or Norway eventually end up borrowing to manage big expenses or to smooth out the rollercoaster of global oil prices.

Here’s a small table showing public debt levels (government debt as a percentage of GDP) for some famous examples, according to IMF 2024:

Still, it wouldn’t make sense to hold these rare cases next to larger, more complex economies. Most microstates don’t have the same challenges—like massive infrastructure needs, defense spending, or social programs. That means avoiding government borrowing is simply easier when everything is on a different scale. Plus, “having no government debt” doesn’t mean there’s nobody in debt; private debt in these countries (what households and companies owe) can still exist and even be sky-high.

Why Do Most Countries Have Debt?

Debt is baked right into the way modern economies work. Think about your own life—very few people manage to own a house, go to college, or start a business without taking out a loan. Governments are basically doing the same, just on a massive scale.

Here are a few key reasons countries end up with debt:

• To pay for wars or emergencies (think: COVID-19 pandemic bills, disaster recovery)
• To build things for the future (roads, hospitals, schools)
• To manage the ups and downs of the economy (spending more in a recession, borrowing less in a boom—if they have the discipline!)
• To cover gaps between what they earn (taxes and other revenue) and what they spend
• To invest in projects that (hopefully) grow the economy and bring in more tax revenue later

But it’s not always about expansion. Sometimes, debt piles up because governments just can’t—or won’t—cut spending, even if their economy slows down. Others use debt as a short-term fix, hoping growth will catch up. In reality, without the discipline to balance the books, the numbers just keep rising.

Here’s a jaw-dropper: According to the Institute of International Finance, by July 2025, total global debt (government, corporate, household combined) hit a record $325 trillion. That’s not just numbers—each person on Earth would have to pay over $40,000 to clear it, babies included!

But debt isn’t always a bad thing. If a country borrows to build a world-class highway system, and it leads to a wave of commerce and new businesses, the debt pays for itself by increasing future earnings. Problems start when countries borrow just to cover daily spending, or when interest costs spiral out of control.

Rich countries can usually borrow at low interest rates, while poorer or unstable countries pay way more. Greece found itself paying punishing rates during its debt crisis in the 2010s. On the flip side, Germany or Japan can sometimes issue bonds and pay almost nothing in interest, because investors see them as safe bets.

What Does Being Debt-Free Really Mean?

Even if a country reports zero central government debt, that doesn’t mean everyone’s flush with cash. There are different layers of debt, from national-level bonds down to local and municipal borrowing.

Take Switzerland. Always the poster child for financial discipline, its central government keeps debt relatively low. But individual states, cities, and public corporations may still owe money. Or look at oil-rich Gulf countries: while government books look pristine, many major state-owned companies borrow heavily for their own projects—and those debts add up.

There’s also the private side. In places like Hong Kong and Monaco, personal and corporate debt outstrips government debt by a mile. In fact, the International Monetary Fund warns that high private debt can be just as risky as public borrowing. Think about 2008—household debt sank the global economy as much as government mismanagement did.

For countries with close to zero public debt, there might be trade-offs. Some choose not to borrow because their economies are tiny and stable—or because they save up massive amounts of wealth during the good times, like Brunei with its oil reserves. But these models can be fragile. What if oil prices crash? What if the big donor stops sending money?

The real question: Is being debt-free actually a good thing? For most economies, the answer is more complicated than “yes” or “no.” Low debt means a country has options during tough times, and can borrow cheaply in emergencies. But being too rigid about never borrowing can leave countries unable to invest in long-term growth or handle big shocks. The sweet spot is somewhere in the middle—enough discipline to avoid runaway debt, but enough flexibility to build for tomorrow.

Lessons You Can Apply from Debt-Free Countries

Sitting back and reading about government debt can feel like it’s a world away from your daily life—but there’s a surprising number of useful lessons here for regular people.

• country not in debt isn’t really a thing for big, modern economies—just like being 100% debt-free isn’t always possible (or smart) for most folks.
• Borrow with a purpose: Personal loans for investing in a house, your education, or a business? Much smarter than constant credit card debt for everyday spending.
• Save for a rainy day: Countries like Brunei built up reserves when times were good, letting them avoid debt later on. Setting aside emergency savings in your own life works the same way.
• Be transparent with money: Governments that hide or fudge their debt numbers often end up in deep trouble. Keeping track of your own finances avoids nasty surprises down the road.
• Don’t fear all debt, but avoid “bad” debt: If you’re borrowing for stuff that doesn’t hold its value, that’s a red flag. Smart countries (and smart people) only borrow for things that improve their future.
• Diversify: Countries relying on only one income source—like oil—can get blindsided by sudden shocks. Having a backup plan and multiple income streams? That applies at any scale.

In the mix of global finance, almost no country is truly debt-free. And that’s okay. The bigger risk comes from taking on too much without a plan, or hiding the real numbers. Want to see which countries are trending in the right direction? Look out for those shrinking their debt loads while still managing strong growth—like Estonia, New Zealand, Singapore, or Denmark. These aren’t “debt-free,” but they keep things under control and avoid the hazards of runaway borrowing.

If you’re thinking of national debt like the boogeyman, it might be time to look closer: sometimes, a healthy dose of borrowing—just like in your own budget—can actually be the smart way to get ahead. The trick is knowing when, how, and (maybe hardest of all) when to stop.