France’s 10-year government bond yield briefly crossed 5% on October 21, for the first time since 2002. The yield is the interest rate that investors demand to lend France money for ten years.
Investors now charge France more to borrow than Italy, which owes more for the size of its economy, or Greece, which restructured its debt in 2012.
That price is one of four signals IMI used to compare the 43 economies that the International Monetary Fund (IMF) classes as advanced.
France came out closest to a debt crisis, with Belgium and Italy next. Japan owes the most of the 43 for the size of its economy, and it came out much further from a crisis than its debt suggests.
What bankruptcy means for a country
A country cannot go bankrupt the way a company can. No court can close it down and sell what it owns to repay its lenders.
When a rich country’s debt grows too large, what happens next depends on whether its own central bank issues the currency that it borrows in.
The United States, the United Kingdom, and Japan borrow in their own currencies. Lenders cannot easily force such a country into default, a failure to pay its debts on time, because its central bank can create money.
For these countries, the danger is inflation. When prices rise faster than the interest on a government’s debt, the debt shrinks in value.
The same inflation shrinks cash savings, bonds, and pensions that do not rise with prices.
France, Belgium, and Italy borrow in euros. The European Central Bank (ECB) issues the euro, and no single member government can create it.
When lenders lose faith in a euro area government, they charge it more to borrow. Its options are then to cut spending, raise taxes, including taxes on wealth, or restructure its debt and pay its lenders less.
In 2012, Greece swapped bonds owned by private investors for new ones, and the face value of that debt fell by 52%.
“Can you really go bankrupt when you control the money printer either directly or indirectly (ECB)?” asks Ladislas Maurice, founder of The Wandering Investor.
In his view, “it’s likelier that central banks will print more money and inflate the debt away.”
“What you don’t want to be is a bond holder of these countries or a pensioner in these countries,” Maurice argues.
How IMI compared the 43 advanced economies
The figures in this article compare a government’s debt with gross domestic product (GDP), the value of everything that a country produces in a year. That share is called the debt ratio.
A deficit is the amount by which a government spends more than it collects in a year. It is also shown as a share of GDP.
IMI compared the economies on four signals:
- Credit ratings from S&P Global, Moody’s, and Fitch, the three main agencies that grade how likely a government is to repay its debt.
- The extra interest that each euro area country pays on 10-year bonds compared with Germany, which all three agencies rate AAA, the top grade. A wider gap means that investors see more risk.
- The IMF’s October 2026 projection of each country’s debt ratio from 2026 to 2031.
- Whether the country borrows in a currency that its own central bank issues.
S&P Global and Fitch grade governments from AAA down to D, for default, and Moody’s uses its own letters for the same steps. Grades below BBB- count as speculative, known in the market as junk, because they signal a higher risk of default.
A high debt ratio counted for less where the IMF projects the debt to fall, or where the country issues its own currency. Among euro area countries, where the signals pointed different ways, IMI gave more weight to whether debt and ratings were rising or falling than to how high they were.
France came out the most exposed, followed by Belgium and Italy, then the United States and the United Kingdom:
- France’s debt is rising in a currency that it cannot print, and investors charge it more to borrow than Italy or Greece.
- Belgium had the largest deficit in the euro area in 2025, and two agencies cut its rating in April 2026.
- Italy owes more for the size of its economy than France or Belgium, and all three agencies rate it below both. Even so, investors charge it less than France.
- In the United States, the IMF projects a deficit of 8.5% of GDP in 2026 and debt rising to 145.0% by 2031. The country borrows in dollars, which its own central bank issues.
- The United Kingdom’s 10-year bond yields were the highest in the G7 in July, and debt interest is its third-largest area of public spending. Like the United States, it borrows in a currency that its own central bank issues.
Japan, Greece, Singapore, and Canada have high debt ratios, and they came out further from a crisis than their debt suggests.
The table below gives the IMF’s figures for all 43 economies and for Bahrain, sorted by debt ratio in 2026.
For the debt and deficits of EU countries in 2025, the text uses the figures that Eurostat, the EU’s statistical office, published on October 21. They can differ slightly from the IMF’s figures in the table.
France has rising debt in a currency it cannot print
France’s government debt reached 119.0% of GDP at the end of June 2026, up from 115.7% at the end of 2025. The government’s 2027 budget bill forecasts 121.7% at the end of next year, and the IMF projects 123.6% by 2031.
France’s deficit was 5.1% of GDP in 2025. The government now expects 5.4% for 2026, against the 5.0% it set in the 2026 budget law.
The High Council of Public Finance, France’s budget watchdog, wrote in September that France now borrows at interest rates above its economy’s growth rate.
When that happens, the debt ratio rises every year on its own, unless the government collects more than it spends before interest. France spends more than it collects even before interest, and the watchdog expects its debt to go on rising in 2027.
The watchdog also judged that the government’s goal of a deficit below 3% in 2029 had little chance of being met unless the economy did much better than expected.
In market data for October 21, France paid 158 basis points more than Germany to borrow for ten years. A basis point is one hundredth of a percentage point.
The same data show Italy paying 117 basis points over Germany, and Belgium and Greece paying 100 each. France has paid more than Italy in almost every week since mid-June.
In early October, the cost of insuring French bonds against a default over five years reached its highest level since early 2013.
S&P Global cut France to A+, six steps above junk, in October 2025. Fitch had made the same cut a month earlier.
Moody’s rates France one step higher, at the equivalent of AA-, with a negative outlook, which means that a cut is possible. It is due to review the rating on October 23.
Fitch wrote in August that France’s ratings are “weighed down by high and rising debt, a political and social backdrop that makes fiscal consolidation difficult, and low potential growth.”
Prime Minister Sébastien Lecornu used a constitutional procedure three times to force the 2026 budget through the National Assembly without a vote on the bill. It passed in February, after six no-confidence motions failed.
On October 21, his finance minister, Roland Lescure, said the government was willing, if necessary, to do the same for the 2027 budget.
During the fight over the 2026 budget, the National Assembly voted down economist Gabriel Zucman’s proposal for a 2% annual tax on wealth above €100 million in late 2025.
Investors outside France owned 58.4% of France’s long-term government bonds at the end of June 2026.
Fitch calls the 2027 presidential election “an important driver” of France’s budget outlook. The National Rally has already set out its own budget plan.
Belgium and Italy are next, on different signals
Belgium
Belgium’s deficit of 5.2% of GDP in 2025 was the largest in the euro area that year. Its debt reached 108.1% of GDP at the end of 2025, and the IMF projects 122.1% by 2031.
In April 2026, Moody’s cut Belgium to the equivalent of A+, one step below its rating for France. “Debt-to-GDP is increasing despite significant consolidation measures that have been undertaken by the government,” the agency said.
A week later, S&P Global cut Belgium to AA-, seven steps above junk, citing “persistent imbalances in Belgium’s public finances.”
Investors charge Belgium less than they charge Italy, and all three agencies rate Belgium above Italy.
Belgium’s interest bill rose as a share of GDP for the third year in a row in 2025. Large deficits pushed it up, and so did maturing debt that the government replaced at higher interest rates.
In February, the IMF told Belgium that it needed “additional fiscal adjustment”, meaning more spending cuts or tax rises, to stabilize its debt.
Since July 2024, Belgium has been under the EU’s excessive deficit procedure, the bloc’s formal process for governments whose deficits or debts break its limits. France entered it on the same date.
Italy
Italy’s debt was 136.7% of GDP at the end of 2025, the second highest in the EU after Greece. The IMF projects 135.6% in 2031.
Moody’s upgraded Italy in November 2025 to the equivalent of BBB, two steps above junk. That came after Fitch’s upgrade to BBB+, three steps above junk.
S&P Global raised its outlook on Italy to positive in January 2026, which means that it may raise the rating. All three agencies rate Italy below France and Belgium.
Leaving interest aside, Italy’s government collects more than it spends. That gap, called a primary surplus, was 0.8% of GDP in 2025.
The IMF says that Italy’s “public debt remains too high and vulnerable to interest and growth shocks.” Even so, investors charge Italy less than France.
The United States and the United Kingdom borrow in currencies that their own central banks issue
United States
The IMF projects a US government deficit of 8.5% of GDP in 2026, and debt rising from 126.8% of GDP in 2026 to 145.0% in 2031.
IMF economists project US interest payments at 5.7% of GDP in 2031, “roughly equal to projected expenditure on Social Security.” The interest rate on 10-year US government bonds was 5.12% on October 20.
At the end of the third quarter of 2025, the Federal Reserve, the US central bank, owned 14% of the bonds and bills that the US Treasury sells. That share was down from 26% in 2021, and foreign investors owned 33%.
Congress caps federal debt by law, and it raised that cap by US$5 trillion in July 2025. In 2023, IMF staff warned that “brinkmanship over the federal debt ceiling could create a further, entirely avoidable systemic risk to both the U.S. and the global economy.”
In 1977 and 1979, a lapse in temporary increases to the cap left federal debt above the limit for a few days. Payments continued, according to the Congressional Research Service.
A month after the 1979 episode, some Treasury payments were delayed, which the service said seemed to come from computer problems rather than the debt limit.
Moody’s removed the last top-grade US rating on May 16, 2025. All three agencies now rate the United States one step below the top.
United Kingdom
The Office for Budget Responsibility (OBR), the UK’s official forecaster, noted in July that UK 10-year bond yields were the highest in the G7. In market data for October 21, the yield on 10-year gilts, as UK government bonds are called, was 5.398%.
Debt interest cost £110 billion in the 2025 to 2026 fiscal year, the third-largest area of public spending after health and welfare. Fitch wrote in August that the share of UK revenue spent on debt interest was “around double” the median for countries with similar ratings.
The IMF projects UK gross debt at 102.0% of GDP in 2026 and 100.2% in 2031. Over the longer term, the OBR expects net debt to be on “a clearly unsustainable upward trajectory by the late 2040s” if policy does not change.
Foreign investors owned 33.6% of gilts in the first quarter of 2026, and the Bank of England owned 16.6%. Chancellor John Healey presents his first Budget on October 28.
Greece, Japan, Singapore, and Canada are further from a crisis than their debt suggests
Greece
Greece had the highest debt ratio in the EU at the end of 2025, at 145.4% of GDP. The IMF projects 111.1% by 2031.
Its budget showed a surplus of 2.0% of GDP in 2025. Fitch upgraded Greece to BBB, two steps above junk, in late 2025, and Moody’s raised its outlook to positive in September 2026.
Japan
The IMF puts Japan’s gross debt at 199.4% of GDP in 2026, the highest of the 43. It projects a fall to 188.9% by 2031.
The Bank of Japan owned 46.7% of Japanese government bonds at the end of June, according to preliminary central bank figures. Foreign investors owned 7.9%, so Japan depends little on lenders abroad.
Japan borrows in yen, which its central bank issues. Its long-term interest rates have risen, and the 30-year bond yield reached 4.168% on October 6, 2026.
That was the highest in the Ministry of Finance’s daily data for the 30-year bond, which begin in 1999.
Interest and repayments on debt take 25.6% of the main budget that Japan first approved for fiscal 2026. The IMF expects the debt ratio to start rising again from 2035, as interest and the costs of an aging population grow.
Singapore and Canada
Singapore and Canada look heavily indebted on paper. Both governments own large financial assets, so their net debt, which subtracts those assets, is small.
The IMF puts Singapore’s gross debt at 166.4% of GDP in 2026. Its government says that it invests most of what it borrows.
It also says that it has “no net debt”, because its financial assets are “well in excess of our debt.”
Canada’s gross debt is 115.6% of GDP in 2026. After subtracting financial assets such as deposits, loans, bonds, and shares, the IMF puts its net debt at 9.3%.
Austria, Finland, and Slovakia have rising debt at lower levels
Austria, Finland, and Slovakia are also under the EU’s excessive deficit procedure. The IMF puts the three countries’ debt at 62.2% to 90.6% of GDP in 2026, and it projects a higher ratio for each of them in 2031.
On April 24, 2026, the day it cut Belgium, S&P Global cut Slovakia and moved Finland’s outlook to negative.
Outside the advanced economies, Bahrain is closer to default
Counting every country that the World Bank classes as high-income changes the top of the list. That group covers countries with a gross national income above US$14,375 per person.
Of the high-income countries that the three agencies rate, Bahrain is the clearest case. Fitch cut it to B on February 23, a junk grade that Fitch says means “material default risk is present, but a limited margin of safety remains.”
The IMF projects Bahrain’s debt at 162.8% of GDP in 2026 and its deficit at 11.4%. Fitch expects that “very high government debt/GDP will continue to rise.”
Fitch says that “strong financial backing” from Bahrain’s partners in the Gulf Cooperation Council, and its high income per person, support its rating and stable outlook. Bahrain has also lowered the minimum property investment for its golden residency to US$345,000.
Several other high-income countries have lower ratings than France. Romania’s deficit of 7.8% of GDP in 2025 was the highest in the EU, and S&P Global and Fitch rate it BBB-, one step above junk, with a negative outlook.
The high-income countries rated BBB- or lower by at least one agency also include Hungary, Oman, Panama, Costa Rica, Trinidad and Tobago, the Bahamas, and Barbados.
For each of them, the IMF projects a lower debt ratio than France’s in 2031.
What past debt crises meant for residents and investors
In 2013, Cyprus rescued or wound down its two largest banks with money from their own creditors, including depositors with more than the insured amount. Insured deposits were protected.
After a 10-day bank holiday, the banks reopened on March 28, 2013, with limits on withdrawals and on moving money out of the country.
The same year, Cyprus pushed back the repayment dates on €1,002 million of its bonds issued under Cypriot law. S&P Global and Fitch each rated this a default on part of its debt.
Greece missed a repayment of about €1.5 billion to the IMF on June 30, 2015, and the IMF recorded Greece as in arrears, meaning behind on its payments. That year, Greece also declared a bank holiday and restricted cash withdrawals and transfers abroad.
Iceland limited the movement of money out of the country after its three main banks collapsed in 2008. Its government paid its own debts “in full and on time,” according to Már Guðmundsson, then governor of its central bank.
“A country does not have to default for its residents to feel the cost of its debt,” argues Adam Juchniewicz, CEO of Bitcoin Lawyer. The adjustment, in his view, “can arrive through higher taxes, weaker public services, or lost purchasing power.”
Juchniewicz believes that “for a family planning its future, the useful question is how much of its income, savings, and freedom to move depends on one government’s choices.”
He points out that “self-custody gives you control of your Bitcoin without relying on a bank to release it.” Even so, “your ability to relocate still depends on residence rights, tax obligations, and your family’s circumstances,” Juchniewicz adds.
Several countries opened residence programs for investors during the euro area debt crisis. Portugal launched its golden visa in 2012, and Spain and Greece followed in 2013.
IMI argued in 2020 that these and other programs “were all opened in response to a crisis of government financing”, and that a new wave of debt would produce more of them.
Juchniewicz cautions that a residence program for investors “deserves the same scrutiny as the country offering it.” If a program requires that you invest “in local property or government debt,” he advises you to “assess that exposure alongside the immigration benefit.”
“The right to live somewhere and the safety of the investment are separate questions,” Juchniewicz notes.
What comes next
Moody’s is due to publish its review of France on October 23, the same day that S&P Global reviews Belgium. The UK Budget follows on October 28.
France’s parliament is debating a 2027 budget that aims for a deficit of 5.0% of GDP. The next presidential election is due in April 2027.
In the United States, outside forecasts expect federal debt to reach the cap in early to mid-2027. The Treasury could then use accounting steps, which it calls extraordinary measures, to pay all its bills for several more months.
