The countries that run permanent budget surpluses — and the uncomfortable reasons why

In 2015, Germany’s current account surplus reached 8.5 percent of GDP, overtaking China in absolute terms to become the world’s largest. The distinction received muted coverage. Surplus countries don’t generate headlines.

Greece was in the sixth year of an economic contraction that had erased roughly a quarter of its pre-crisis output. Spain’s unemployment was above 22 percent. Wolfgang Schäuble, Germany’s finance minister and the primary architect of the conditionality attached to the Greek bailouts, was still saying what he’d been saying since 2010: the deficit countries had no one to blame but themselves.

This is not an article about the injustice of that. It is about the arithmetic.

Global current account balances must sum to zero. Not approximately, not on average — by accounting definition, the way debits must equal credits. Every surplus implies a deficit somewhere. And because government fiscal choices are the primary lever through which an economy’s aggregate saving-investment balance shifts, a persistent budget surplus tends, through mechanism rather than coincidence, to produce a persistent current account surplus. The fiscal choice is the policy; the external position is the consequence.

The countries examined here — Norway, Singapore, Germany — have run persistent surpluses through different mechanisms and for different stated reasons. What they share is this: the surplus doesn’t come from nowhere, and it doesn’t go nowhere. It comes from a choice, and it lands on the other side of someone else’s ledger. The question worth asking is who made the choice, what it costs, and who pays.

Norway — the cleanest case

The argument starts where the case against it is strongest.

Norway’s Government Pension Fund Global held assets worth approximately NOK 21,300 billion — roughly $2 trillion — at the end of 2025, making it the largest sovereign wealth fund in the world by assets under management. The fund owns about 1.5 percent of all listed equities globally and holds real estate and bonds in more than 70 countries. Norway’s current account surplus ran at 16.7 percent of GDP in 2024 and 14.2 percent in 2025 as European energy prices eased from their post-invasion peaks.

The fiscal architecture behind these figures is genuinely sophisticated. Oil and gas revenues do not flow into the operating budget — they go into the GPFG and are invested abroad, with annual withdrawals capped at approximately the fund’s expected real return, currently set at 3 percent of the fund’s value. This arrangement prevents the oil windfall from inflating the domestic economy, distorting wages, crowding out non-resource industries — the Dutch disease problem that has hollowed out natural resource exporters from Angola to Azerbaijan. It also prevents the generation that happens to live over the oil field from simply spending the inheritance. The design is careful. Norway has done something impressively hard.

But Norway’s non-oil structural budget deficit in 2026 was approximately NOK 579 billion — around 11.7 percent of mainland GDP. Without the petroleum sector, Norway runs a deficit. The surplus is geological luck institutionally managed, not fiscal discipline institutionally enforced.

This distinction matters because “fiscal discipline” is the language in which surpluses are routinely praised, and Norway is frequently offered as evidence that discipline produces security. Strip away the oil revenues and you don’t have a model of fiscal restraint — you have a well-managed inheritance. The discipline is real, but it is discipline applied to an asset that dropped into Norway’s lap. Countries without North Sea oil fields cannot replicate Norwegian fiscal virtue because Norwegian fiscal virtue is downstream of Norwegian geology.

The GPFG’s $2 trillion in assets doesn’t sit inert. The fund holds equities, bonds, and property across more than 70 countries — a $2 trillion creditor position against the rest of the global economy, which means a $2 trillion debtor position distributed across the governments, corporations, and property markets on the other side. When Norway’s fund buys British gilts, it funds the British government’s deficit. When it buys equities in a German manufacturer, it holds a claim on German productive capital. This isn’t a criticism of Norway. It’s just what the mechanism looks like once you follow the money past the border. The surplus becomes a claim, and the claim belongs to someone.

The fiscal rule revision

In 2017, Norway revised the withdrawal limit downward from 4 to 3 percent of the fund's value — an acknowledgment that expected real returns on globally diversified portfolios had declined since the rule was written in 2001, and that the original assumption no longer held. The revision is evidence of a framework that adapts rather than calcifies. But it also reveals the internal tension inside even the most carefully designed surplus-management structure: the rules that seemed adequate at founding can start working against their stated purpose as conditions change, and somebody has to notice in time.

Singapore — the compression machine

Norway’s surplus has an obvious explanation. Singapore’s is more instructive precisely because it doesn’t.

Singapore’s current account surplus was approximately 17.5 percent of GDP in 2024 and 17.7 percent in the third quarter of 2025, with the fourth quarter of 2025 producing the largest surplus on record since the data series began in 1986. The government budget recorded a surplus of approximately 1.9 percent of GDP in fiscal year 2025. Singapore has no oil, no gas, no extractable resources. It is a 720-square-kilometre city-state, and its surplus dwarfs Norway’s as a share of GDP.

The mechanism is the Central Provident Fund. For workers under 55, CPF contributions total 37 percent of wages — 20 percent from the employee, 17 percent from the employer — directed into government-managed accounts accessible primarily for retirement, healthcare, and approved housing purchases. A third of wage income is removed from the spending circuit at source, under compulsory law, with the government controlling both access and interest rates. Singapore’s household consumption as a share of GDP sits persistently below the levels typical of high-income economies, reflecting a savings rate maintained not merely by cultural preference but by legislative design.

Singapore’s Ministry of Finance is candid about the rationale. Its official policy documentation states that reserves “provide an important buffer, given the small and highly open nature of Singapore’s economy and virtual lack of natural resources,” enabling the government to respond to crises “without borrowing heavily and passing on the financial burden to future generations.” The 1997 Asian financial crisis — which devastated regional economies that lacked comparable buffers — is not an abstraction in Singapore’s institutional memory. The strategic logic is genuine, the government states it plainly, and it deserves to be engaged with seriously rather than dismissed as post-hoc rationalisation.

Grant it its full weight. It still doesn’t change what the mechanism does.

Singapore produces more than it consumes at its income level. The gap between domestic output and domestic absorption has to be absorbed somewhere, and by accounting identity it is absorbed by trading partners. Singapore’s structural savings rate requires, by arithmetic, that other economies collectively run the demand that Singapore’s workforce does not express. Whether this was intended, accepted as a side effect, or simply not considered when the CPF was designed doesn’t change the external consequence.

There is a distributional dimension inside Singapore that the national-level framing obscures. Wages locked in CPF accounts cannot circulate as consumer spending. The CPF simultaneously forces savings and suppresses the worker consumption that would otherwise reduce the external surplus. A worker earning SGD 5,000 a month sees SGD 1,000 redirected into mandatory accounts before it reaches any part of the domestic economy. Aggregated across millions of workers, this is the state compressing its own domestic market by law.

The accounting of fiscal tightness

Singapore's official government budget excludes revenue from land sales, which flow into a separate Development Fund and into Past Reserves rather than the operating account. In a city-state where the government owns most of the land and land is extraordinarily scarce, this is not a trivial accounting choice. Government land sales generate substantial resource rents — urban land is, functionally, Singapore's North Sea — that simply don't appear in the headline budget figure. The structural parallel with Norway is closer than it's usually acknowledged: both countries capture large resource rents through mechanisms that sit outside the operating budget, and both countries' fiscal surpluses are more resource-driven, and less a product of conventional fiscal restraint, than the official numbers suggest.

Germany — the moralizer

Norway and Singapore generated their surpluses largely in isolation from identifiable victims. The corresponding deficits were distributed across global markets, diffuse, traceable to no single proximate cause. Germany’s case is structurally different.

Germany’s current account was roughly in balance when the euro launched in the late 1990s. By 2007 it had reached 6 percent of GDP. By 2015, at 8.5 percent, it was the largest current account surplus in the world in absolute terms — larger than China’s. The countries on the deficit side of Germany’s ledger were not distant trading partners. They were France, Italy, Spain, Greece, Portugal — eurozone members sharing a currency and a monetary policy with the country whose structural choices were widening the gap. There was no exchange rate mechanism available to correct it.

Two policies produced the surplus. The first was Agenda 2010 and the Hartz reforms — introduced by Chancellor Schröder from 2003 and implemented in stages through 2005. The legislation restructured unemployment benefits, reduced replacement rates and eligibility durations, weakened union bargaining leverage, and created legal frameworks for mini-jobs and temporary contracts. The Centre for European Reform’s 2017 analysis of the reforms noted that German wage restraint had begun earlier, around 1995, driven partly by competitive pressure from globalisation and reunification; the Hartz legislation accelerated and codified a trend already underway. Whatever the origin, the result was a widening competitiveness gap. Unit labour costs rose approximately 9 percent in Germany between 1999 and 2007, versus roughly 23 percent in Italy and over 30 percent in both Spain and Greece.

Inside a single currency, a divergence of that magnitude cannot be corrected by devaluation. It is absorbed by the deficit countries as a structural disadvantage, correctable only through domestic wage suppression — a process that requires years of mass unemployment and is politically devastating for whoever is governing when the bill arrives.

The second policy was the schwarze Null. Germany’s Schuldenbremse — the constitutional debt brake enshrined in the Basic Law in 2009 — limits the federal structural deficit to 0.35 percent of GDP. The political commitment to the “black zero,” zero net new borrowing, during the Merkel-Schäuble years went beyond even that constitutional floor. Fiscal tightening compounded the competitive dynamic: Germany’s trade surplus was not being recycled as demand for its partners’ goods. The money accumulated in financial institutions and corporate balance sheets, flowing outward as capital — including as lending to the southern European markets now running structural deficits against Germany. German and French banks were significant purchasers of peripheral eurozone sovereign debt in the years before the crisis.

When capital inflows reversed, the deficits became emergencies. Spain was running a current account deficit of roughly 10 percent of GDP in 2008; Greece and Portugal were at comparable or higher levels. The adjustment was not shared. Germany did not expand domestic demand. No eurozone fiscal mechanism distributed the burden. Everything fell on the deficit side: austerity, internal devaluation, mass unemployment. Greece lost roughly 25 percent of its GDP between 2008 and 2013. Spain’s unemployment peaked at 26 percent in the first quarter of 2013; youth unemployment exceeded 55 percent at the same point — a figure representing an entire cohort that entered the labour market during the worst years and carried the damage forward.

Wolfgang Schäuble presided over Germany’s record surplus while designing the conditionality of the Greek bailouts — conditions requiring austerity severe enough to collapse domestic demand, which collapsed tax revenues, which made the fiscal targets harder to hit, a dynamic the IMF’s own research department later documented as predictably self-defeating. His stated position, consistent across interviews, public statements, and his 2024 memoir, was that the peripheral countries had lived beyond their means. The sentence was never completed: Germany had lent them the money to do so, had designed the currency union in which they could not adjust, had refused to share in the correction when the structure failed, and insisted the entire cost fall on the borrowers.

The schwarze Null was accumulating its own domestic bill in the meantime, which didn’t feature in those statements. German municipalities had built up an investment backlog of €215.7 billion by 2024, according to the KfW Municipal Panel — up from €138 billion in 2019 and €165.6 billion in 2023. School buildings alone: €67.8 billion in deferred investment. Roads and transport infrastructure: €53.4 billion. Germany’s bridges, hospitals, water infrastructure, and digital networks were degrading under the same fiscal framework that had been prescribed, with considerable moral authority, to the countries that couldn’t afford their own.

Then the sequence of dates. Greece’s economy hit its post-crisis floor in 2013-2014. Spain’s youth unemployment peaked in early 2013. On March 18, 2025, Germany’s Bundestag — the outgoing 20th parliament, meeting in special session — voted 512 to 206 to amend the Basic Law: exempting defence spending above 1 percent of GDP from the Schuldenbremse and establishing a €500 billion infrastructure fund, roughly 11.6 percent of Germany’s 2024 GDP, entirely outside the debt brake’s scope. The stated triggers were Russia’s continuing war in Ukraine, the deterioration of the transatlantic relationship, and Germany’s visible economic stagnation.

Not Greek unemployment. Germany’s bridges.

Budget surplus and current account surplus — the accounting link

The schwarze Null was a government budget policy. Germany's 8.5 percent current account surplus is an economy-wide figure — the aggregate excess of national saving over national investment across all sectors. These are related but not identical; in theory, a government running a deficit could maintain a large current account surplus if private-sector saving were high enough to compensate. In Germany's case, both the government and the private sector — households saving heavily, corporates retaining earnings — were simultaneously in surplus. The sectoral balances identity makes the arithmetic explicit: Government Balance + Private Sector Balance + Current Account Balance = 0. When both public and private sectors are net savers, the current account surplus is the residual. Fiscal policy was not the only driver of Germany's surplus, but it was the driver most directly under political control.

The architecture of non-accountability

After three case studies, one question sits unanswered: why didn’t anyone stop this?

At the Bretton Woods conference in 1944, John Maynard Keynes proposed a new international monetary unit — the bancor — to govern trade imbalances. The proposal’s distinguishing feature was symmetry: surplus countries would be charged interest on excess bancor holdings, just as deficit countries faced penalties for persistent deficits. The mechanism would have distributed adjustment pressure across both sides of the ledger, making it costly for creditor nations to accumulate indefinitely while debtor nations were forced to contract. The United States delegation — led by Harry Dexter White — rejected it. The United States was then the world’s largest surplus economy and had no interest in a system that penalised creditors. The IMF that emerged from Bretton Woods has extensive conditionality for deficit countries and nothing equivalent for surplus countries.

The asymmetry is structural, not incidental. Deficit countries face market discipline that surplus countries do not: rising sovereign bond yields, capital flight, potential currency crises that force adjustment regardless of political preference. Surplus countries face no comparable mechanism. Their assets are bid up. Their borrowing costs fall. The adjustment pressure runs in one direction only, and the post-war international financial architecture built it that way.

The eurozone compounded this by removing exchange rates as even a partial corrective. Germany’s competitive advantage within the single currency couldn’t be eroded by the mechanism that partially constrains surpluses between countries with floating currencies. The European Commission’s Macroeconomic Imbalance Procedure technically flags current account surpluses above 6 percent of GDP as imbalances; Germany has been flagged repeatedly. The enforcement mechanism has never been used against a surplus country to meaningful effect.

The IMF’s External Sector Reports — published annually since 2012 — have characterised Germany’s current account surplus as substantially stronger than warranted by economic fundamentals and desirable policy settings; a 2019 press conference put the gap at roughly four to five percent above what conditions justified. A CEPR-CFM survey of European economists found more than two-thirds agreed that German surpluses posed a threat to the eurozone economy. Berlin’s response was consistent: polite non-engagement.

Because there is no mechanism. Keynes anticipated the problem in 1944. Nobody has built the solution since. When surplus countries lecture about fiscal discipline, they are invariably describing the other side of the ledger — the side the system was designed to pressure, and the side that didn’t get to design the system.

Germany is now running a fiscal deficit. The infrastructure fund will deploy €500 billion over several years on roads, schools, bridges, the digital networks that peer economies built a decade ago. The accounting identity works in reverse: a government borrowing to invest absorbs more domestic demand; imports rise relative to exports; the surplus narrows. Germany’s current account surplus had already fallen to 4.5 percent of GDP in 2025 — €197.4 billion, down from approximately €249 billion the year before. Some of that reflects economic weakness. Some of it, eventually, will be the spending.

The adjustment will come.

But the question the 2025 reform leaves open is not technical. The sequence of dates answers it without commentary: Greek GDP floor, 2013. Spain’s youth unemployment peak, 2013. German debt brake reformed, 2025. What it took to change the policy was not a decade of Greek austerity, nor half a decade of Spanish unemployment above 20 percent, nor repeated IMF warnings politely absorbed, nor an economists’ consensus identically ignored.

What it took was Germany’s own unheated school buildings, its own crumbling motorways, its own military exposure in a war being fought on European soil.

The international system produced precisely the outcome Keynes anticipated and designed a mechanism to prevent. The only thing it failed to produce was anyone with the leverage to make adjustment happen before the costs became German. Surplus countries remain free to accumulate, to lecture, and to change course when they choose — which turns out to be when the bill arrives at their own address.

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