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punisa
28th June 2011, 11:14
As situation heats up in Greece, can someone explain why is the ratio of GDP and external debt such an important factor? And why some numbers don't correspond...?
for example:

source 1)
http://edition.cnn.com/2011/BUSINESS/06/19/europe.debt.explainer/index.html?hpt=hp_t1

Amount of government debt as percent of annual GDP.
Lists FRANCE at 81,7 %

but here...
source 2)
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
List of countries by external debt

It says FRANCE is at 188% (???)

So what figures are correct? or do they mean something different?

Also, according to wikipedia Ireland has 1224% Debt-to-GDP ratio and Greece has 165%.

I'm no expert... but I can see how with strong measures of savings you can bring Greece's problem from 165% back to at least 100%, but what in the world will Ireland do about it?
BTW, Luxembourg has 4636%, but I guess that Lux is more of a corporate-banking state and thus these numbers are *somehow* normal..

khad
28th June 2011, 11:31
The distinction is in the difference between PUBLIC debt and EXTERNAL debt.

Public debt is the amount that a national government owes.

External debt is total debt in a country owed to sources external to the country in question. This includes government, corporations, and individuals, so naturally this would be higher.

punisa
28th June 2011, 19:41
Thanks for clarifying that Khad.
How about those huge Debt-to-GDP ratios? As in Ireland