Sovereign risk — ability to pay
Enter a country's national accounts and read its sovereign screening ratios. The headline Debt-to-GDP = Govt Debt / GDP, the fiscal balance = Revenue − Expenditure, the current-account proxy Exports − Imports, and reserve cover map onto a transparent risk gauge. This measures ability to pay only.
Debt-to-GDP96%Medium risk
Debt-to-GDP96%Medium>90% elevated, >120% high
Fiscal balance / GDP−5.0%Mediumdeficit >6% of GDP = high
Current-account / GDP−3.0%Lowwide deficit + thin reserves raises risk
Reserves / imports5.0 mo3-month cover is the adequacy floor
Fiscal balance −US$25bnCurrent-account proxy −US$15bn
GDPUS$500bn
Government debtUS$480bn
Government revenueUS$190bn
Government expenditureUS$215bn
ExportsUS$130bn
ImportsUS$145bn
FX reservesUS$60bn
The weakest pillar sets the band, so overall risk is medium. Try this: load Greece 2009 to see a debt ratio near 127% and a deficit near 15.4% of GDP push every gauge into the red.
Caveat: this gauges abilityto pay. A sovereign's willingness to pay is a separate, political choice. A government can default with resources left, and a high-debt sovereign that borrows in its own currency can stay safe, so read the gauge as one input, not a verdict.
Caveat: this gauges abilityto pay. A sovereign's willingness to pay is a separate, political choice. A government can default with resources left, and a high-debt sovereign that borrows in its own currency can stay safe, so read the gauge as one input, not a verdict.