A few details from the attached link related to public debt of different countries (as of 2010).

1. A debt-to-GDP ratio of 60% is quite often noted as a prudential limit for developed countries. This suggests that crossing this limit will threaten fiscal sustainability.

2. For developing and emerging economies, 40% is the suggested debt-to-GDP ratio that should not be breached on a long-term basis.

3. On average, public debt rose from 60% of GDP on the eve of the crisis (end-2007) to almost 75% by end-2009.

4. IMF country teams project debt ratios to continue rising over the next five years, averaging more than 85% of GDP by 2015.

5. Japan’s public debt is expected to reach nearly 200% of GDP in 2010.

6. Portugal, Italy, Ireland and Greece all show projected 2010 public debt above or headed for 100% of GDP, with Italy leading the pack at 127%, Greece at 120%, Portugal at 90% and Ireland at 65%.

A few reports are attached that provide better understanding of the current scenario.

http://www.voxeu.org/debates/commentaries/there-optimal-debt-gdp-ratio

I agree too with respected Dr. Rao. He has referred good links, as well.

Debt is a fiscal inability and suffocator of growth and development of countries that are either developed or under developed who live in it and therefore there should not be as such "a desirable level of debt". Debt is a  sign of economic difficulty which by its  nature is fast accumulating and therefore, the minimal amount is even a threat to the healthy development of a society. I prefer societies to live within their means to stay out of debt and make a positive leap towards a healthy economic life which is free of debt.  

Nageswara told everything! I agree with him.

Essentially, public debt ought to be considered undesirable whatever the amount of debt is there. However, the transactions in the modern world may involve a necessity for debt but this has to be kept to a minimum. It is apparently unwise for an individual to live beyond the available means. The same applies to a country whether it is developed or developing.

Frugality has to be exercised in case certain lines are crossed. This will ensure that the country will not fall under the control of internal or external "debt-lenders". There is an ultimate loss of freedom & a subsequent ruin afterwards.

The present generation does not have the right to burden the next generation with heavy debts. In my opinion, those developed countries which have huge debts are heading towards disaster despite the "bright" appearance that covers the interior illness.

Dear @Sylantyev, Public Debt Stock and Structure - data on  Serbia are given in the following quote:"On June 30 2014, General Government Debt amounted to EUR 21,114,680,744 out of which Public Debt amounted to EUR 20,660,190,484 and Non-Guaranteed Local Government Debt EUR 454,490,260"!!!! :(

DEBT STATISTICS – June 2014: see the following link!

Paper: "Public Debt Management Strategy 2014 - 2016", of course, in Serbia, ara given in attached paper, see link!

http://www.javnidug.gov.rs/upload/Stanje%20i%20struktura/Debt%20report%20-%20ENG.pdf

http://www.javnidug.gov.rs/upload/Strategija/Strategy/Public%20Debt%20Management%20Strategy%202014_2016_02122013.pdf

I do find this "strictly confidential" papers from Workshop on Debt, Finance and Emerging Issues in Financial Integration, "Public Debt Management in Developing Countries: Key Policy, Institutional, and Operational issues" very informative! 

http://www.un.org/esa/ffd/events/2008debtworkshop/papers/Balino-Sundararajan-paper.pdf

Excessive public debt is an exploitation. American government has a huge amount of debt. Some other conutries buy a large amount of it. This is equivalent to low-rate loans to the Americal government.

Dear Nageshwar's thread is appropriate.  I support his point of view, which is quitr rootrd in evidence. We need a judicious balance between the debt and the need for developemnet., Both of these need to be matched. 

Living in debt is a negative sign for both developed and developing countries.

The linkage of debt to GDP is not a right factor. GDP is measure of growth while debt is an external borrowing, may be support a growth aspect / project initiatives...

Debt is a form or Handcuff to growth and increase the dependability (for the borrower) to the country (lending organization is influenced by a rich country) which has some major concern on its own investment or growth in the borrowing country....

The major crunch in many of the developing countries is the problem in repaying the debt. 

Developing countries need to see the budget (Revenue vs Expenses), apportion the debt repayment in the expenses and work out a ROI  and BOP, to take a wise decision.

Always understand that debt payment when not properly managed, 'Is a load that is shared with the future generations' - highly ridiculous.

No debt is desirable for an individual, why should any debt be desirable for a community? The most desirable debt is no debt at all.

Please watch the documentary DEPTOCRACY

https://www.youtube.com/watch?v=qKpxPo-lInk 

I also agree with Krishnan and like what Kamal quoted.  Dept nowadays is unavoidable for most countries.  No one is indispensable since the way governments management are for drowning their countries in a sink and leaving their positions after increasing the dept and GDP is freazed.  

The question about debt (not this thread, but the general current fashion) is a fallacy. The problem is not the debt itself, but the power of each country to 'sell it' to the rest of world. If debt as itself was a problem, then US, UK, Germany and other countries should have been controlled for it, but nothing has happened due to their 'general power'. Debt is a trap for small countries like Greece. Those countries, since they have not (or they have not developed yet) another kind of 'soft power', they should avoid being over-borrowed.

If debt is a problem, then the solution is one: Stop promoting credit institutions like banks and find an alternative economic system.

I think, Debt is unnecessary thing, in this case... 

 To define the desirable external debt for different countries in different financial conditions we need first to identify the current self-sufficiency of any country  such as the % of imported energy (renewable and non-renewable), % of agricultural and manufactured  products, % of employment   opportunities offered yearly compared to the population. 

I believe the major source of debt is energy need, the more there is need for energy the more there is debt especially  for countries which completely have no production of this type of energy or control for the use and consumption of energy.

Any increase in energy prices will affect the debt of countries in need of non-renewable energy.

Yes, I too consider that " the question about debt is a fallacy. The problem is not the debt itself, ..."

In my understand, the credit nowadays is given under unknown interest rate which put high risk at who ask for it, and who gives credit has in general much more control (and lately do not avoid its dangerous use) of the changes of interest rate than who ask credit.You may ask credit at 1.5% and at certain point paying at 15% or more.

So, I agree that countries with low  influence on the values of interest rate should be very careful as it could cost generations of suffering, and lost of progress which is another extra cost for the future generations.

It appear to be so simple that basic home managing should be enough to see that, but experience of many countries and companies show that may be it is much more complicated than it appears.

Finally, I recommend do not look only for the progress achieved with that public debt but look also for all the destruction and suffering due problems with debt. I do not know one case with zero balance or small negative balance, as far as I know most recent cases present extreme high loses after all.

As the government draws its income from much of the population, government debt is an indirect debt of the taxpayers.

U.S. public debt remains on an unsustainable path and will reach 106 percent of economic output in 25 years versus about 74 percent currently, the Congressional Budget Office said on July 15, 2014.

http://www.reuters.com/article/2014/07/15/us-usa-fiscal-debt-idUSKBN0FK1TG20140715

See the public debt cartoon on US debt from the following link.

http://politicsandfinance.blogspot.com/2013/01/cartoons-obama-and-debt-limit.html

I try here, as a non-specialist in the field, to answer to the question:  "How to find desirable external debt for different countries in different financial conditions?"

In my understand, one have to relate the worst/average/best scenariy(es) of interest rate with respect to the worst/average/best scenariy(es) of economic growth which are both difficult to predict. But remember that interest rate may be in pratical terms unlimited while economic growth not only is limited as follow different tendency of interest rate. So, it is a RISK ANALYSIS and remember Pareto's kind of thinking where 20% of something (causes) may determine 80% of results which in my opinion may apply when debts go after certain value.

Considering best scenariy of economic growth with best scenariy(es) of of interest rate  (low rates) is a non-responsable practice. Another problem with it is that like with weather, the predictions lost "accuracy" with time, and who consider long periods of time certainly (in my opinion) do not know what is doing! (cannot know)

Hope it contributes for the discussion.

They should have very good reason to think they can pay it back, but should not be distracted by numbers like "the universal optimal level of debt" or even "that one single number which will guide their every decision when it comes to spending money.

However, if forced to answer the question concretely, I would answer: Not so high as to make it impossible to pay it back and not so low as to undermine liquidity of financial markets.

Note: Public debt often plays a key role in creating/assuring liquidity in financial markets.

Also, without considering whether the money is owed in domestic or foreign currency, this question can safely be answered as: somewhere between 0 and 200%.

But if it's 0%, then you can be sure that for whatever reason there are already very established and liquid financial tools available.

I am afraid that most cases of debt in developing countries are corruption and nothing else.

@Nathan.

I can not see what facts can support the "safely" between "0% and 200%". If you can give them, please bring it to us..

Note that several countries entered in intervention of IMF with values below that limit while other not. Greece, Irland, Portugal, Italy and others were around 100% (see data from Haynam Advisors or also at Forbes in 20Jan2010) which should not be a problem if not looking for what I mentioned on previous intervention in this discussion: "...who gives credit has in general much more control (and lately do not avoid its dangerous use) of the changes of interest rate than who ask credit.You may ask credit at 1.5% and at certain point paying at 15% or more."

Or are you including private banking assets which is european countries for some reason has been far worse problem than the U.S. problem. Look that many european countries entered in intervention of IMF increasing the public debt to solve private banking debts.

For these reasons, I cannot believe in unsupported answer that  is in [0,200]. Some countries can support well much higher values. It is a (difficult and very specialized) RISK ANALYSIS and you have to build a model that includes main scenery parameters. With such model you will understood that are the people from these countries who are contribute to recover of these banks by increasing debts of their contries. Also can see by the risk analysis that such idea is also too dangerous but time will show and has any risk it could not happen but not enough to make me happy).

The irony in the case of Greece is that after entering in the 'IMF rules' the debt increased (due to miscalculation of a Keynesian multiplier) and did not decrease!

Japan has debt well over 200%, but this doesn't particularly concern most analysts who advise people who actually buy those bonds, since the debt is largely held domestically. Well, maybe it concerns them a bit, but that's risk, and they are still buying.

Algeria has essentially zero debt. So does Norway. Once accounting for significant reserve funds, that is.

Would it be optimal for Japan to reduce its debt from 200% to 100% by, say, raising taxes significantly? Would Norway or Algeria be able to achieve good value for money by spending resources now in highly resource-heavy economies?

Please account for a wee element of facetiousness. The point is that there isn't an ideal number, and that point to the potential range makes questions of "is it 50% or 75% for (insert counry name here)"?, not that it is strictly advisable for a given government or fiscal authority to target 0% of in excess of 200%. In certain cirumstances, given the status quo, I would argue that yes, there are cases of both 0% and 200% being optimal.

As proof, I look to the lack of institutional investors pressuring the Japanese government to rapidly reduce debt (more likely they are interested in potential to profit by buying this debt), but please keep in mind that all investments bear risks. A corrolary proof, I suggest that the Japanese aren't stupid, and if it had been optimal for them to reduce their debt level from 200%+ to much lower, and could figure a way to do so without destroying the credibility for financial markets, they would have done so already.

In economics it is a common enough theoretical assumption to say "they did it, and that's the proof that it was optimal". Of course the logic can be ripped to shreds in many practical applications. But here is an instance where I believe it is in fact instructive.

The opposite argument would involve taking on the logic of the masterminds behind Japanese and Norwegian fiscal (etc) policy, whatever that may be.

So if it was important to me to understand THEIR strategies, and more a propos, the ways that some methodological assumptions may influence their approaches/assumptions in modeling, I would go to their websites and read up on policy reports, etc.

Ceterus parabus, then, by Norway and Japan, I DO think it is reasonable to say that the range is this great. I would not assume that they would use the same analytical methods, perhaps because the economies of institutional/political structures offer different informational inputs. If you're going to try to pinpoint some "ideal" level of debt (of course conversation/discussion can lead to many interesting considerations too), then at the end of the day some serious number crunching should be done. The number will vary of time and with economic environment. I mean that in the most general possible way.

OK, that's not very useful information for most countries, whose economies are much different than Norway or Japan. Except for the last bit.

No silver bullets. No magic numbers.

Prove me wrong.

OK, but probably the asker is interested in opinions and/or article suggestions which will legitimize the ability to say A, B and C recommend public debt of no more than 100% of GDP for advanced economies and no more than 50% for less advanced economies which in quite a number of cases only mobilize 10-20% of GDP for various public services, capital investments, etc.

Here is a the current level of public debt for different countries as of December 2013. It varies from 227% for Japan to 2.68% for Saudi Arabia. Most of them are increasing while some of them are able reduce it from their highest level.

http://www.tradingeconomics.com/country-list/government-debt-to-gdp

Dear Kamal

Jordan is there.Press the + sign below the table to expand.

Jordan 87.75% (current) 80.17% (previous).

One more comment.

A must be avoided situation is "no space/money for the political decisions needed" and practically all the focus/energies being spent with high level of debt and how to pay it. (note: not all decisions from politic men are political decisions)

But, hardly can be understood that countries and companies simply do not have minimum levels of reserves (in money or equivalent) at a reasonable value. Part of unreasonably/excessive bonus or special compensations are vital blood which is drained out of companies to some special employees (not owners) or from countries to companies. I have more difficulty in imagining a owner or a king of a kingdom doing it because their position requires also a long term vision, although some also did huge damages in this field.

If I am not wrong, any risk analysis reasonably done, even the simplistic ones, show that minimum levels of reserves should be important even when negotiating credits at same time.

So, within this subject of desirable level of public debt, here is a subquestion: with these reasons does it makes (or not) any sense to have any minimum public reserves at same time that are managing/trying to reduce the public debt? Any other reasons?

I first wondered why to join yet another web network.... Now I know, quality of questions and their difficulty. This one os very difficult, but the quality of answers very high. I do not think I can add much, just some personal observations.

I do not believe countries can grow without investments and developing countries are unlikely to be able to do essential investments without indebting themselves. What is the highest level? The first answer by Nagewara gave a very good overview, but this is only a guideline.

I do not think there is a golden rule on what is a good level of debt, but there is one thing that is absolutely necessary, the quality of the investments and the national capacity, i.e. the basis for getting indebted. 

In my experience as consultant, I realised that many common practices in the development of national strategies are detrimental. The quality of analysis and planning is essential, but I see weak administrations handling costly programmes for development plans arranged through professional storytellers (i.e. consultants).  

As a well intentioned consultant, I found myself having to educate public servants in charge of programming how to analyse the country, discover development bottlenecks, and devising solutions by themselves. This instead of inventing a programme or changing the name in one of another 'successful' country (what they requested from me). Approval of the programme was the main objective, not quality.

Success? Yes, we got a good programme.... success no.... after that implementation was bad, as this did not correct for corruption, implementation capacity weaknesses, legal inefficiency etc etc. So I wonder if I helped or if I did worse by creating the impression that the country was better in this than it actually was.

In any case ,what I mean is that quality of debt means quality of implementation capacity, a good programme and the governance able to transform this investment in sustained GDP growth. If that is OK, indebtedness can be quite high.

The idea that influx of money to the country as FDI into bad programmes will increase GDP growth through a trickle down effect to offset the debt capital cost is not valid.

Summary: There is god and bad debt and the level of acceptable share GDP of each is not the same.

I do not think I have added much, just a warning that theoretical levels cannot be applied on the ground without a good local context check. It this important to say it. Given the practices I see in consultancy it has to be repeated again and again.

I do think it is a political question, highly dependent on the specificic institutional, social and economic situation

In the case of Indonesia, the law places a 60% cap on the debt to GDP ratio.

Public debt allows governments to have higher economic growth. Nevertheless, unmanaged public debt may lead to financial crisis. Accordingly, government must manage public debt prudently. Governments surely need to take their ability to finance the debt into account before taking new debt. Funds generated from debt also need to be used productively so as to maintain the ability to finance the debt.

I agree with Jorge Nuñez, there is no golden rule on the level of public debt. Each government needs to choose which level it feels comfortable with. Yet, the World Bank's 77 percent ceiling is serely a good Guidance.

Moreover, the level of public debt needs to be consulted with the people. The governments must be transparent on how the funds are used. Public distrust in this this delicate matter will certainly be catastrophic. Undoubtedly, public debt policy falls under political discourse. Indonesia is indeed a good example. As mentioned by Prof. Akhmad Solikin, the people and the government of Indonesia agreed to set the cap as a law.