Global public debt nears $100 trillion: IMF warns of mounting risks
Photo: IMF assessed global public debt (Getty Images)
Global public debt will exceed $100 trillion this year. At the current pace, the global debt-to-GDP ratio will approach 100% by the end of the decade, surpassing the pandemic peak, states Vítor Gaspar, Director of the IMF’s Fiscal Affairs Department during a briefing in Washington.
"Deficits are high and global public debt is very high, rising, and risky," he said, presenting the Fiscal Monitor.
Gaspar highlighted three groups of countries. In about one-third of countries, public debt is higher and is expected to grow faster than before the pandemic. This group includes not only the largest economies, such as China and the United States, but also other major countries like Brazil, France, Italy, South Africa, and the United Kingdom, representing about 70% of global GDP.
According to him, in another third of countries, public debt is higher but is forecasted to grow more slowly or decrease compared to the pre-pandemic period. In the rest of the world, debt is lower than before the pandemic.
"The Fiscal Monitor makes the case that public debt risks are elevated, and prospects are worse than they look," said the Fund's representative.
The IMF’s analysis shows that risks to public debt forecasts are skewed upwards. In an extremely adverse scenario, public debt could be 20 percentage points of GDP higher than the baseline forecast, he said.
Gaspar stated that in most countries, the fiscal plans implemented by governments are insufficient to ensure stable or decreasing debt ratios.
"Additional efforts are necessary. Delaying adjustment is costly and risky. Kicking the can down the road will not do. The time to act is now. The likelihood of a soft landing has increased. Monetary policy has already started to ease in major economies. Unemployment is low in many countries," he said.
According to the Fund’s representative, given these circumstances, most economies are well-prepared to undertake fiscal adjustments.
"Public debt is very high, rising, and risky. The time is now to pivot towards a gradual, sustained, and people‑focused fiscal adjustment," he said.
It is worth noting that the IMF predicts that in 2025, Ukraine’s government debt will, for the first time, exceed 100% of its GDP. In the coming years, the debt is not expected to fall below 100% of GDP.
