Debt-to-GDP ratio compares what a country owes with what it produces for a given period.
It indicates the country鈥檚 ability to pay back its debt and is one of the closely watched indicators used by investors and credit rating firms in evaluating a government鈥檚 credit-worthiness.
A lower debt-to-GDP ratio is generally seen as a more favorable sign as it shows that a country is producing enough to eventually pay its debt. Conversely, a higher ratio indicates that it is less likely that a country can pay its debt back and there is a higher risk of default.
In August last year, National Treasurer Roberto Tan said聽 the country鈥檚 debt-to-GDP ratio was targeted to be reduced to nearly 50 percent in six years in a bid to improve the country鈥檚 credit standing.
The country鈥檚 debt-to-GDP ratio of 56 percent, Tan said, was still higher than the international threshold of 50 percent. The Philippine鈥檚 debt-to-GDP ratio was 55.4 percent in 2010, 57.3 percent in 2009 and 57 percent in 2008.
At the end of 2010, 14 countries in the European Union had public debts exceeding 60 percent of their GDP, according to a July 2011 CNN report.
Quoting Eurostat, the statistical office of the European Union, CNN said that Greece topped the 鈥淓uropean debt league鈥� with a 142.8 percent government debt-to-GDP ratio, followed by Italy (119 percent), Belgium (96.8 percent), Ireland (96.2 percent), Portugal (93 percent), Germany (83.2 percent), France (81.7 percent), Hungary (80.2 percent), the United Kingdom (80 percent) and Spain (60.1 percent).
The US debt exceeded 100 percent of GDP聽 after the government鈥檚 debt ceiling was lifted in August.
US President Barack Obama had signed the debt-ceiling deal into law to avoid the country鈥檚 first-ever default. With that authority, the public debt has climbed to $14.58 trillion, putting it just over the $14.53-trillion size of the US economy in 2010.
Japan鈥檚 debt-to-GDP ratio is 234.1 percent, according to 2011 estimates of the International Monetary Fund. Inquirer Research
Source: Investopedia.com, Inquirer Archives, CNN, IMF, Eurostat