Government Debt to GDP (2019)

What is Government Debt to GDP?

Government Debt to GDP is general government gross debt before deducting assets, called Maastricht debt, expressed as % of GDP, total output. Eurostat, the statistical office of the European Union, compiles it for all 27 Member States and EU and euro area totals. It follows Excessive Deficit Procedure fiscal rules under European accounts. It excludes financial assets and guarantees, promises to pay if others default, and Europe judges it against the 60% reference value.

When is it released and what happens each release?

Member States send quarterly debt continuously and file annual tables twice each year. Annual tables cover 4 years plus a forecast, add deficit ratios with revenue and spending, and face full verification. Quarterly releases follow about 110 days after quarter end, and annual releases follow twice each year. Quarterly pages show debt-type splits, Member State changes, and intergovernmental loans as a memo item for analysis only.

First releases carry a provisional label before revision. Annual data face thorough verification and revision between the two annual notifications.

What moves Government Debt to GDP?

The ratio reflects 3 instrument types, while subsector splits stay outside the headline. The ratio rises when debt grows faster than output and falls when output grows faster.

• Currency and deposits, 3.5%: cash in circulation and deposits in national and foreign currency.

• Debt securities, 80.6%: tradable bills and bonds sold on secondary markets without ownership rights.

• Loans, 16.0%: direct loans that cannot be traded, large where states use official rescue facilities.

One historical example puts euro area debt at 84.1% of GDP and EU debt at 77.8%, both down toward the 60% reference. Greece at 176.6%, Italy at 134.8%, and Portugal at 117.7% stood far above 60%, while Estonia at 8.4% stood lowest. Bulgaria at 20.4% and Luxembourg at 22.1% stood near the bottom of the range.

In a shock example the ratio jumped to 89.5% in the EU, the steepest rise on record, as spending rose and GDP fell. Falling ratios need not mean less debt, and rising ratios need not mean new borrowing alone.

How is Government Debt to GDP calculated?

1. Sector: place the 4 central, state, local, and social security units inside general government.

1. Add debt: sum end-period stocks in 3 instruments: currency and deposits, debt securities, and loans at face value, the amount due at maturity.

1. Consolidate: remove debt one government unit owes to another, so only debt owed outside government counts.

1. Divide: compute (debt / GDP) x 100 using the sum of the 4 quarterly GDPs for quarterly ratios. For example, instruments of 50 and 800 and 150 sum to 1000 and GDP of 1250 gives 80.0%.

1. Convert: translate non-euro stocks at end-period rates and GDP flows at average rates, so exchange moves can shift EU totals.

1. No extra smoothing: use no weights or seasonal adjustment, the removal of seasonal patterns, since 4-quarter GDP summation already smooths the ratio.

Key point: this is not IMF debt, net debt, or debt at market value. Market value means the traded price. Net debt deducts assets. It is gross consolidated debt at face value in only 3 instrument classes.