Besides sound fiscal policy, the transition from a country with large external debts to a creditor nation is important in relation to Denmark’s status as a safe haven. A few decades back, the current-account deficit was a theme that dominated practically all economic discussions. Denmark had permanent deficits from the early 1960s until 1990.
External debt accumulated and constituted 40 per cent of GDP when it peaked in 1986. That severely restricted Denmark’s room for economic manoeuvre. Many of us remember Finance Minister Knud Heinesen’s warning that Denmark was heading for an abyss. Today we are in the opposite situation. Denmark’s net foreign assets now exceed 35 per cent of GDP and continue to grow.