Samer Choucair: Global Debt Nears Record Levels as Saudi Arabia Emerges as a Destination for Institutional Capital
Investment leader Samer Choucair said the ranking of the world’s most indebted countries in 2025 cannot be understood through debt-to-GDP ratios alone. According to IMF estimates, government debt reached approximately 308.7% of GDP in Venezuela, 206.5% in Japan, 187.6% in Sudan, 171.3% in Singapore, 147.6% in Bahrain, 145.7% in Greece, 139.4% in Lebanon, and 137.1% in Italy.
Samer Choucair said institutional investors look beyond the headline debt ratio and examine the currency in which debt is issued, the depth of the domestic funding base, the assets supporting the balance sheet, economic growth, and the credibility of fiscal policy before allocating capital.
“The institutional investor does not punish debt itself,” Choucair said. “It punishes the loss of a country’s ability to service that debt without sacrificing growth, the exchange rate, or foreign-exchange reserves.”
High Debt Does Not Mean Equal Risk
Choucair noted that average global gross government debt approached roughly 94% to 95% of GDP in 2025, remaining above pre-pandemic levels but below the peak recorded in 2020.
He said Venezuela represents a fundamentally different case from Japan. Venezuela’s debt ratio of approximately 308.7% partly reflects the collapse in nominal economic output, while Japan’s debt exceeds 206% of GDP but is supported by a large domestic investor base, local-currency financing, and one of the world’s deepest sovereign bond markets.
Singapore, with debt equivalent to around 171.3% of GDP, provides another example of why headline ratios can be misleading when detached from a country’s broader balance sheet.
In Singapore’s case, government borrowing is closely linked to liquidity management and asset accumulation rather than the type of structural fiscal deficit typically associated with fragile sovereign borrowers.
For Samer Choucair, the distinction is central to institutional capital allocation. Two countries may report similar debt ratios while presenting completely different credit risks once funding structure, currency exposure, asset quality, and economic resilience are taken into account.
Sudan and Lebanon: Elevated Risk Despite Different Debt Profiles
Choucair said Sudan’s debt level of approximately 187.6% of GDP reflects the consequences of conflict, economic contraction, accumulated arrears, and severely limited access to international capital markets.
Lebanon, at roughly 139.4%, represents a different but similarly severe credit story shaped by years of default, restructuring pressures, financial-sector distress, and the erosion of the real value of local-currency obligations.
Samer Choucair stressed that a decline in a country’s debt ratio does not necessarily indicate improving credit quality.
In some cases, a lower ratio may reflect changes in valuation, restructuring, inflation, currency depreciation, or broader economic dislocation rather than genuine fiscal repair.
That distinction is particularly important for investors analyzing distressed sovereigns, because an apparently improving headline number may coexist with deteriorating institutional capacity, weaker access to financing, and a declining ability to generate sustainable economic growth.
Bahrain Tests the Gulf’s Fiscal Resilience
Choucair described Bahrain as the Gulf economy facing the most sensitive sovereign-debt position, with government debt estimated at approximately 147.6% of GDP and an overall fiscal deficit reaching around 11% of GDP in 2024.
“Bahrain is an early test of the assumption that Gulf economies are automatically insulated simply because they are located next to major oil producers,” Choucair said.
He argued that institutional investors distinguish between an economy financing diversification through sovereign surpluses and one relying heavily on debt markets to fund current expenditure and persistent deficits.
Continued growth in Bahrain’s debt burden could therefore make its financing costs increasingly sensitive to oil prices, the pace of fiscal reform, delays in expanding non-oil revenue, and the implementation of subsidy reforms.
For investors, the issue is not whether Bahrain remains integrated within the Gulf financial system, but how much of that regional support should be incorporated into sovereign-risk pricing and at what cost.
Saudi Arabia Retains Greater Capital-Allocation Capacity
Samer Choucair said the contrast within the Gulf becomes particularly clear when Bahrain is compared with Saudi Arabia.
IMF estimates place Saudi government debt at below 30% of GDP around the middle of the decade, leaving the Kingdom with significantly more fiscal space than many highly indebted economies.
Choucair said that difference gives Saudi Arabia greater capacity to finance capital expenditure associated with Vision 2030 across renewable energy, manufacturing, tourism, sports, infrastructure, and the digital economy without crowding out private-sector capital to the same extent.
The United Arab Emirates, Qatar, and Oman operate within variations of the same broader framework, while Bahrain has become more exposed to changes in sovereign-risk pricing relative to other Gulf economies.
For institutional investors, Saudi Arabia’s advantage therefore lies not simply in having a lower debt ratio, but in the relationship between that fiscal capacity and a large pipeline of productive investment.
The Investment Question: Who Funds the Debt?
Choucair said capital allocation in 2026 should begin with fiscal space rather than the name of the country.
“Investors do not price the debt ratio itself,” Samer Choucair said. “They price the state’s ability to finance and roll over that debt without suffocating economic growth.”
The relationship between borrowing costs and nominal growth has consequently become a central variable in sovereign-risk analysis.
Investors are also paying greater attention to the primary fiscal balance, the maturity profile of government obligations, the proportion of debt denominated in foreign currencies, and the strength of the domestic investor base.
A sovereign that can refinance debt at manageable rates while maintaining nominal growth and a credible fiscal framework may remain investable even with a relatively high debt ratio.
By contrast, a country with lower headline debt can still face severe stress if borrowing costs rise sharply, foreign-currency liabilities dominate the balance sheet, and economic growth remains weak.
Opportunities and Risks for Institutional Investors
Choucair said the current environment favors selective positioning within fixed-income markets rather than a broad withdrawal from the region.
Gulf economies with significant fiscal space can continue to offer opportunities across infrastructure, energy, logistics, financial services, industrial development, and the non-oil economy.
The investment case is particularly strong where sovereign expenditure creates productive infrastructure capable of attracting private capital and generating long-term cash flows.
The risks remain substantial, however. A sharp decline in oil prices could reduce fiscal flexibility across energy-exporting economies, while delayed fiscal reform in Bahrain could increase pressure on its sovereign balance sheet.
Political and security risks continue to weigh heavily on Sudan and Lebanon, while persistently high real yields could create valuation pressure for equities and other risk assets in highly indebted developed economies.
For Choucair, these conditions reinforce the importance of distinguishing between debt that creates productive capacity and debt that simply postpones structural adjustment.
The Investment Outlook
Samer Choucair said the investment environment in 2026 is likely to reward capital capable of differentiating between sovereign borrowing used to build productive assets and borrowing used to delay necessary reform.
“An economy that combines relatively low debt, high investment expenditure, and clear fiscal governance will remain better positioned to attract institutional capital,” Choucair said.
From that perspective, Saudi Arabia remains in a relatively strong position within the Gulf.
Its advantage does not stem solely from having a lower government debt burden than many highly leveraged economies. More importantly, its fiscal capacity is being deployed alongside an extensive investment program designed to convert public expenditure into productive capacity and sustainable non-oil growth.
For Samer Choucair, that distinction is becoming increasingly important as global debt approaches historically elevated levels.
Institutional investors are likely to become more selective, placing greater value on sovereigns that can demonstrate not only an ability to borrow, but also a credible ability to transform borrowed or public capital into productive assets, stronger cash-flow generation, and durable economic growth.
In that environment, Saudi Arabia’s combination of fiscal space, large-scale investment, and economic diversification gives it a potentially stronger position in global institutional portfolios at a time when investors are increasingly focused on the quality, rather than simply the quantity, of sovereign debt.