Concept
• Measures total outstanding government debt relative to the size of the economy
• Indicates long term fiscal sustainability
Why this ratio matters
• Absolute debt is meaningful only when compared to economic output
• Higher growth can offset higher debt levels
Fiscal risks
• High ratio increases interest burden on future budgets
• Reduces fiscal space for crisis response
Strategic importance
• Lower ratio strengthens sovereign credibility
• Improves resilience against external shocks
