Net Debt Per Capita

A measure of how much debt per citizen is held by a country’s government

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What is Net Debt Per Capita?

Net debt per capita is a measure that tells how much debt per citizen is held by a country’s government. It is the total debt obligation issued or used by the government divided by the total population.

Net Debt Per Capita

If the net debt per capita is lower, the risk of default is lower, and the bond quality is higher. The net income per capita also indicates whether the government is over-levered or under-levered. The government can be a national, state, or municipality.


  • Net debt per capita is the total debt held by a government per resident of the country.
  • Net debt per capita is not an actual economic indicator. Instead, the values are usually used in making political statements about fiscal policies.
  • It can also be used as a means to estimate the borrowing limits of a government.

Net Debt Per Capita and Debt Burden

The capital improvement needs can be fairly identified by national governments with political support. The debt obligations place a burden on the country’s taxpayers; hence, the legal capacity of borrowing can be estimated by comparing the outstanding debt levels with the current demographic and economic data. Therefore, the debt capacity ratios, such as net debt per capita, can often be considered as an alternative to the legal capacity of borrowing for estimating the borrowing limits.

The use of net debt per capita as a measure of the debt burden can be justified by the fact that capital requirements often rise with the increase in population. If long-term debt grows in proportion with the growth in demands of the increasing population, there is no significant change in net debt per capita.

However, if the rate of increase in long-term debts is higher than the population growth rate, the level of debt may rise above the citizens’ ability to pay, assuming that the tax burden is distributed evenly among the citizens.

Net Debt Per Capita Formula

The net debt per capita formula is:

Net Debt Per Capita = (Short-term Debt + Long-term Debt – Cash – Cash Equivalents) / Population

For example, suppose a government holds $200 billion of long-term debt, $85 billion of short-term debt, $20 billion in cash, and a population of 200 million. The country’s net debt per capita will be:

Net Debt Per Capita = ($200 billion + $85 billion – $20 billion) / 200 million = $1,325

It implies that if the government must pay all the national debt today, each taxpayer owes $1,325 to the government, assuming that every citizen becomes responsible for the outstanding debt.

However, in practice, every citizen is not liable for a country’s outstanding debt. Hence, net debt per capita is an indicator used to measure the creditworthiness of local issuers, ranging from municipality to a country, rather than the repayment ability of citizens.

Net Debt Per Capita by Country

With a population of 126,529,100, Japan’s net debt per capita is the highest in the world at $93,164.34, followed by Singapore at $73,421.49. As reported in 2019, the net debt for Japan was $11.788 trillion. The government of Japan provided financial assistance to local insurance companies and banks after the crash of the Japanese stock market.

The companies were provided credits with low interest by the Japanese government, which also consumed or transferred the taxes to invigorate the troubled economy. However, the actions taken caused the debt level of Japan to soar.

The debt level of the United States, as reported in 2019, was $21.465 trillion, with the country’s national debt level sharply increasing in the years after The Great Depression. Though the United States is accorded an excessively low rate of interest on Treasury bills, it spent around $380 billion to cover the repayment of the debt, which is more than the federal budget of Canada.

It implies that the United States can run the Canadian government with the amount it uses to repay its debt. It is expected that by 2023, the interest payments of the U.S. government will be even larger than its defense budget.

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