The International Monetary Fund (IMF) has sounded the alarm over soaring global public debt, forecasting that it will exceed 100% of global GDP by 2029, marking the highest level since 1948. In its latest Fiscal Monitor Report, the IMF cautioned that under an “adverse but plausible scenario,” global debt could surge to 123% of GDP, nearing post–World War Two levels.
According to Vitor Gaspar, head of the IMF’s Fiscal Affairs Department, the rising debt trend could trigger financial instability reminiscent of the 2010 European sovereign debt crisis. “The most concerning situation would be one of financial turmoil,” Gaspar warned, emphasizing the importance of building fiscal buffers to withstand future shocks.
The IMF urged countries—both advanced and developing—to reduce deficits and debt while strengthening economic resilience. Gaspar highlighted that nations with stronger fiscal space have historically managed crises more effectively, limiting the damage to jobs and growth.
The report also raised concerns about a renewed US-China trade war, which could further slow global output despite a slightly improved 2025 growth forecast. Rising interest rates and increasing global demands—ranging from geopolitical tensions to climate-related disasters—are straining budgets worldwide.
Debt levels in major economies such as the United States, Japan, Britain, France, Italy, Canada, and China have already crossed or are expected to exceed 100% of GDP. The IMF noted that while advanced economies can manage higher debt due to strong financial markets, emerging and low-income nations face rising borrowing costs and limited policy options.
Gaspar urged the US to reduce its fiscal deficit to help stabilise the global financial system, as US debt is projected to surpass 140% of GDP by 2029. Meanwhile, China’s debt is expected to rise from 88.3% to 113% over the same period.
The IMF also highlighted that targeted investment in education and human capital could boost long-term growth, estimating that allocating just 1% of GDP to education could raise output by up to 6% in developing economies by 2050.
“While the fiscal equation is politically difficult to balance, the time to prepare is now,” Gaspar stressed, calling on governments to act decisively to prevent a global fiscal crisis.
