Global public debt is expected to pass $100 trillion for the first time this year and be approaching 100 percent of Gross Domestic Product by 2030.
The latest International Monetary Fund Fiscal Monitor said public debt was currently “very high” and would likely exceed 93 percent of GDP in 2024.
It warned that governments needed to build stronger “fiscal buffers” to ensure public finances were stable and sustainable.
The IMF said, although debt was projected to stabilise or decline in about two thirds of countries, it would remain well above levels expected before the COVID-19 pandemic caused a spike in public spending.
“Countries where debt is not projected to stabilise account for more than half of global debt and about two-thirds of global GDP,” the Fiscal Monitor said.
“There are good reasons to believe that future debt levels could be higher than currently projected. The political discourse on fiscal issues has increasingly tilted toward higher government spending in recent decades.”
The report said governments were facing pressure to spend on green transitions, aging populations and security concerns.
Past experience suggested that projections tended to underestimate rather than over-estimated debt levels.
Rebuilding fiscal buffers in “a growth-friendly manner” and containing debt was essential to ensuring sustainable public finances and financial stability.
“Global debt-at-risk – the level of future debt in an extreme adverse scenario – is estimated to be nearly 20 percentage points of GDP higher three years ahead than in the baseline projections of the World Economic Outlook, reaching 115 percent of GDP in 2026,” the IMF said.
“This is because high debt levels today amplify the effects of weaker growth or tighter financial conditions and higher spreads on future debt levels.
“For advanced economies as a group, three-year-ahead debt-at-risk has declined somewhat from pandemic peaks and is estimated at 134 percent of GDP, whereas debt-at-risk has increased to 88 percent of GDP for emerging market and developing economies.”
The full report is on the IMF website
