In this article, we will look at the 20 Countries with the Highest Government Spending to GDP.
Public Debt and its Impact on Government Spending
Government spending is one of the indicators to gauge the economic performance of a country. However, higher government spending does not necessarily mean a progressive economy. Government spending is rather a complex indicator that takes into account revenue generation, inflation, public debt, spending on social protection, and other related economic indicators to reflect the overall performance of an economy.
According to a report by the IMF, the global public debt declined sharply in 2021-22, however, it edged up again in 2023 and remained above pre-pandemic levels by 9% of GDP. Moreover, on February 21 Reuters reported that the global debt hit a record high in 2023 and was recorded at $313 trillion. One of the main drivers of the increase in global debt was the surge in debt to GDP ratio of the developing economies. The global debt increased by $15 trillion in the last quarter of 2023 on a year-on-year analysis. Mature markets such as the US, France, and Germany also contributed greatly to the public debt, as 55% of the increase in global debt originated from developed economies. However, the Debt to GDP ratio for these economies decreased slightly by around 2% in 2023. On the other hand emerging economies including India, Argentina, China, Russia, Malaysia, and South Africa reported the highest increase in debt to GDP ratio, indicating potential debt repayment and fiscal challenges. In addition to the debt challenge, geopolitical conflicts around the globe are expected to boost defense spending across the globe, thereby further challenging the debt-repaying ability of developing countries.
World Economic Outlook and the Key Drivers of Government Spending
The fiscal policy of a country is also dependent on the world economic outlook as major global economic disruptions such as pandemics can hamper the growth of both developed and emerging economies. The overall world economic outlook has improved, the inflation rates are falling and major global economic disruption threats have been averted. According to the IMF World Economic Outlook April 2024 report the world economy is expected to continue growing at 3.2% in 2024 and 2025. Moreover, global inflation is also forecasted to continue declining from 6.8% in 2023 to 5.9% in 2024.
Despite the positive growth outlook debt distribution, deficits, and public finance risk remain a challenge for economies around the globe. According to the IMF’s Fiscal Monitor 2024 report, the monetary policy remained restrictive for around 85% of the world economies. Moreover, spending also remained higher as a measure to abate the pandemic crises in many countries. The revenue in advanced and emerging economies (excluding the United States and China) exceeded the pre-pandemic projections by 1.4% of GDP. The primary spending also remained higher and was recorded to be 3% of GDP for advanced economies and 2% of GDP for emerging economies. One of the key drivers of higher spending in emerging economies was increased social spending, however for advanced economies higher spending reflects a slow recovery from pandemic subsidiaries and social transfers. According to Fiscal Data by Treasury.gov, the United States spent $3.82 trillion as government expenditure against the revenue generation of $2.96 trillion for the fiscal year of 2024, leading the country into a fiscal deficit. However, 22% of the US public spending went to social security functions, which has the potential to generate more revenue in the form of taxes in the future.
With this context, let’s look at the 20 countries with the highest government spending to GDP.
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Our Methodology
To curate the list of 20 countries with the highest government spending to GDP, we relied on data from the IMF. First, we selected our primary metric, which is expenditure as a percentage of GDP. We sourced the expenditure as a percentage of GDP data for 2024 from the IMF and ranked the countries in ascending order. Please note that we have included the GDP current prices for 2024 as a secondary metric also sourced from the IMF.
We have also included statistics from the European Commission and national financial institutions for additional context.
20 Countries with the Highest Government Spending to GDP
20. Sweden
Expenditure as a Percentage of GDP (2024): 48.05%
GDP Current Prices (2024): $623.05 billion
Sweden ranks as the 20th country with the highest government spending to GDP. It is a Scandinavian country, characterized by coastal islands and inland lakes. According to the European Commission, 2023 was a tough economic year for Sweden, not only did the GDP of the country contracted by -0.2%, but inflation was recorded to be at 5.9%. Moving forward to 2024, the economy is forecasted to recover slightly with a GDP growth rate of 0.2% and inflation falling to 2.0%. However, other economic indicators still pose a threat, unemployment is forecasted to increase from 7.7% in 2023 to 8.4% in 2024, and the general government balance is also forecasted to further deteriorate from -0.6% of GDP in 2023 to -1.4% of GDP in 2024.
19. Tonga
Expenditure as a Percentage of GDP (2024): 48.37%
GDP Current Prices (2024): $0.58 billion
Tonga is situated in the Southwestern part of the Pacific Ocean. The country consists of 170 islands that are divided into 3 main groups including Tongatapu, Ha‘apai, and Vava‘u. Tonga has a GDP of $0.58 billion as of 2024. Moreover, according to the Asian Development Bank, the GDP of Tonga is expected to grow at 2.6% in 2024 and 2.3% in 2025. Inflation in the country is already below the global average and is forecasted to drop further from 4.5% in 2024 to 4.2% in 2025. Although Tonga ranks as the 19th country with the highest government spending to GDP, it still faces a serious labor shortage challenge. On one hand, remittances remain a major source of economic stability in the region as most of its labor force has migrated to Australia and New Zealand in search of better employment opportunities. On the other hand, this has created a labor shortage in the country with the government finding it difficult to fill its civil services vacancies.
18. Poland
Expenditure as a Percentage of GDP (2024): 48.59%
GDP Current Prices (2024): $844.62 billion
Poland is a Central European Country that ranks 18th on our list of countries with the highest government spending to GDP. Poland has a GDP of $844.62 billion as of 2024 and spent 48.59% of GDP in government expenditure during the same year. 2023 was a tough year for Poland, due to a sharp economic downturn. The country experienced growth of only 0.2% with inflation reaching a staggering 10.9% during the year. However, according to the European Commission, Poland has dealt with the economic slowdown and is poised for gradual recovery, with GDP growing at 2.8% and inflation coming down to 4.3% in 2024. Although Poland is one of the countries with the highest government spending to GDP, it faces the issue of negative general government balance as a percentage of GDP and a growing public debt as a percentage of GDP. The general government balance (as a percentage of GDP) decreased further from -5.1% in 2023 to -5.4% in 2024. In addition, the gross public debt (as a percentage of GDP) also increased for Poland and is now standing at 53.7% of GDP as of 2024.
17. Luxembourg
Expenditure as a Percentage of GDP (2024): 49.10%
GDP Current Prices (2024): $88.56 billion
Luxembourg is a small European country surrounded by Belgium, Germany, and France. The country had a GDP current price of $88.56 billion as of 2024 and spent 49.10% of its GDP on government spending. However, Luxembourg is faced with a series of economic challenges. According to the European Commission the GDP of the country contracted by -1.1% in 2023 due to a drop in net exports and contractions in investment. The slow economic activity was notable in the financial and construction sectors and was mainly attributed to high interest rates and high levels of real estate prices. While the growth has recovered slightly in 2024 and the GDP is now forecasted to grow at 1.4% in 2024, the country still deals with a negative current account balance at -3.4% of GDP and increasing gross public debt standing at 27.1% of GDP as of 2024. On the bright side, inflation has fallen in Luxembourg to 2.3% in 2024 and is forecasted to drop further in 2025 to reach 2.0%.
16. Lesotho
Expenditure as a Percentage of GDP (2024): 49.66%
GDP Current Prices (2024): $2.4 billion
Lesotho is a landlocked country in Africa surrounded by South Africa. It ranks as the 16th country with the highest government spending to GDP on our list. The country has a GDP of $2.4 billion as of 2024 and it spent 49.66% of its GDP as government expenditure during the same year. According to the African Development Bank, the GDP of Lesotho is forecasted to expand by 2.6%, and consumer price inflation is forecasted to drop to 5.5% in 2024. However, despite the economic growth and high spending, the country is running with a negative budget balance of -5.1% of GDP as of 2024.
15. Kuwait
Expenditure as a Percentage of GDP (2024): 50.39%
GDP Current Prices (2024): $160.4 billion
Kuwait is a Middle Eastern country situated in the Western part of the Asian continent. It ranks as the 15th country with the highest government spending to GDP. The country has a GDP of $160.4 and spent 50.39% of its GDP on government expenditure in 2024.
14. Palau
Expenditure as a Percentage of GDP (2024): 50.64%
GDP Current Prices (2024): $0.31 billion
Palau is a country in the Western Pacific Ocean. It ranks as the 14th country with the highest government spending to GDP. Palau has a GDP of $0.31 billion and spent 50.64% of its GDP on government expenditure in 2024.
13. Italy
Expenditure as a Percentage of GDP (2024): 50.93%
GDP Current Prices (2024): $2.33 trillion
Italy is a European country that ranks 13th on our list of countries with the highest government spending to GDP. According to the European Commission, the GDP of Italy grew by 0.9% in 2023, mainly attributed to an expansion in capital spending and tax credits. Moving forward to 2024, the GDP is forecasted to continue growing at 0.9%, with inflation coming down from 5.9% in 2023 to 1.6% in 2024. However, the country is faced with a debt crisis and has a debt-to-GDP ratio of 138.6% as of 2024.
12. Austria
Expenditure as a Percentage of GDP (2024): 52.11%
GDP Current Prices (2024): $540.89 billion
Austria ranks as the 12th country with the highest government spending to GDP. The county has a GDP of $540.89 billion and will spend 52.11% of its GDP on government expenditure in 2024.
11. Belgium
Expenditure as a Percentage of GDP (2024): 55.07%
GDP Current Prices (2024): $655.19 billion
Belgium is a Western European country that ranks 11th on our list of countries with the highest government spending to GDP. The country has a GDP current price of $655.19 billion as of 2024.
10. Finland
Expenditure as a Percentage of GDP (2024): 55.22%
GDP Current Prices (2024): $308.06 billion
Finland is a Northern European Country that ranks 10th on our list of countries with the highest government spending to GDP. According to the European Commission the country fell into a recession in 2023 and its GDP contracted by -1.0%. Inflation in Finland was recorded at 4.3% in 2023 and is forecasted to decrease to 1.4% in 2024. The country also faces a debt crisis and a negative current account balance. The gross public debt was recorded to be 80.5% in 2024 with a negative current account balance of -1.6% during the same year.
9. Libya
Expenditure as a Percentage of GDP (2024): 56.43%
GDP Current Prices (2024): $48.22 billion
Libya is a North African country that ranks 9th on our list of countries with the highest government spending to GDP. The country had a GDP of $48.22 billion in 2024 and spent 56.43% of its GDP on government spending during the same year.
8. France
Expenditure as a Percentage of GDP (2024): 56.93%
GDP Current Prices (2024): $3.13 trillion
France is a Western European Country that ranks 8th on our list of countries with the highest government spending to GDP. According to the European Commission, the economic growth in France for the first half of 2024 is expected to remain subdued with growth forecasted at 0.7%. However, inflation has been easing since the past year and is forecasted to reduce from 5.7% in 2023 to 2.5% in 2024. The current account balance for the country is also expected to improve from -2.2% in 2023 to -1.4% in 2024.
7. Ukraine
Expenditure as a Percentage of GDP (2024): 57.30%
GDP Current Prices (2024): $188.94 billion
Ukraine ranks as the 7th country with the highest government spending to GDP. It has a GDP of $188.94 billion as of 2024 and expenditure as a percentage of GDP of 57.30%.
6. Federal States of Micronesia
Expenditure as a Percentage of GDP (2024): 59.97%
GDP Current Prices (2024): $0.48 billion
The Federated States of Micronesia is a country in the Western Pacific Ocean comprising more than 600 islands. It ranks 6th on our list of countries with the highest government spending to GDP. According to the Asian Development Bank, the GDP of Federated States of Micronesia is forecasted to grow at 3.1% in 2024 and the inflation is expected to cool down to 4.1% in 2024.
5. Marshall Islands
Expenditure as a Percentage of GDP (2024): 68.43%
GDP Current Prices (2024): $0.31 billion
The Marshall Islands are situated in the Pacific Ocean. The country ranks 5th on our list of 20 countries with the highest government spending to GDP. The GDP of the Marshall Islands is forecasted to grow at 2.7% in 2024. The country has a GDP of $0.31 billion as of 2024.
