Debt-to-GDP Ratio is an important indicator of a nation’s fiscal health and economic stability. It is an important metric that allows the national government, economists, creditors and investors to assess a nation’s ability to pay back its debt. It provides one measure of the sustainability of a country’s economic policies and fiscal condition.

Simply put, the Debt-to-GDP ratio is the ratio of a country's public debt to its gross domestic product (GDP). It measures the relative proportion of a government's total debt compared to its economic growth. A higher debt-to-GDP ratio means that the government’s debt is larger than its economic output and its ability to pay off its debt with the resources available is more difficult. In simple words, it is the number of years it would take to pay back debt if GDP was used for repayment.

Several developed countries, such as the United States, Canada, France and Germany, have a debt-to-GDP ratio of around 100%, which means that the debt is equal to one year's worth of economic output. This is a level deemed acceptable by economists and analysts, since it means that the debt burden is not too high.

However, some countries, particularly developing countries, have a debt-to-GDP ratio of more than 120%. This level presents a dilemma to the economic policy makers and could cause a financial crisis if left unchecked. As the debt-to-GDP ratio rises, the country’s risk of defaulting on their loans increases, thus leading to higher borrowing costs and a lack of investor confidence.

Ultimately, understanding a country’s debt-to-GDP ratio is key in understanding the sustainability of its current fiscal policy. This ratio is thus an important part of debt sustainability analysis, as it allows economists and policy makers to assess the government’s ability to pay back its debt. Therefore, governments need to maintain a debt-to-GDP ratio that is below the danger level in order to remain financially stable and prevent an economic crisis.