Global public debt to hit US$100 trillion by end of 2024, IMF says

According to a new analysis by the International Monetary Fund, global public debt is set to reach US$100 trillion, or 93% percent of the global gross domestic product, driven by the US and China by the end of this year.

In its latest Fiscal Monitor, an overview of global public finance developments, the IMF said it expects debt to approach 100 percent of GDP by 2030 and warns that governments will need to make tough decisions to stabilise borrowing.

The IMF report, which urges governments to rein in debt, predicts that debt will increase in the United States, Brazil, France, Italy, South Africa, and the United Kingdom.

“Waiting is risky: country experiences show that high debt can trigger adverse market reactions and constraints room for budgetary maneuver in the face of negative shocks,” it said.

With little political appetite to cut spending amid pressures to fund cleaner energy, support aging populations, and bolster security, the “risks to the debt outlook are heavily tilted to the upside,” the IMF said.

Countries where debt is not projected to stabilise make up over half of the global debt and about two-thirds of global GDP.

Using a “debt-at-risk” framework, the IMF found that the future debt level in a highly adverse scenario could reach 115 percent of GDP in three years, almost 20 percentage points higher than in the baseline projections.

“This is because high debt levels today amplify the effects of weaker growth or tighter financial conditions and higher spreads on future debt levels,” it said. 

The debt-at-risk metric for advanced economies has slipped from pandemic peaks and is now estimated at 134 percent of GDP, but it has risen to 88 percent for emerging markets and developing economies. 

While slowing inflation and falling interest rates are offering governments a window to improve their fiscal situation, the IMF said there’s little sign of urgency. 

“Current fiscal adjustment plans fall far short of what is needed to ensure that debt is stabilised [or reduced] with high probability,” it said.