The world’s total public debt is expected to surpass $100 trillion this year for the first time, with the growth likely outpacing earlier forecasts due to political inclinations favouring higher spending and slow economic growth driving up borrowing needs and costs, according to the International Monetary Fund (IMF).
In its latest Fiscal Monitor report, the IMF projected that global public debt will hit 93% of global GDP by the end of 2024 and could approach 100% by 2030—exceeding the 99% peak during the COVID-19 pandemic. This marks a 10-percentage-point increase compared to 2019, prior to the pandemic’s surge in government spending.
Released just ahead of the IMF and World Bank’s annual meetings in Washington, the report warned that future debt levels could be even higher than predicted, particularly as the US, the world’s largest economy, appears inclined toward increased spending.
The IMF’s concerns about rising debt levels come just three weeks before the US presidential election, where both candidates have pledged new tax cuts and spending, potentially adding trillions to the federal deficit.
According to estimates from the Committee for a Responsible Federal Budget (CRFB), Republican candidate Donald Trump’s proposed tax cuts could add approximately $7.5 trillion in new debt over the next decade, more than double the $3.5 trillion increase projected from the plans of Vice President Kamala Harris, the Democratic nominee.
The IMF report highlights that debt projections are often significantly underestimated, with realized debt-to-GDP ratios averaging 10 percentage points higher than initially forecast over a five-year period.
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Debt could be further exacerbated by factors such as weak economic growth, tighter financing conditions, and heightened fiscal and monetary uncertainty in major economies like the US and China. The report also outlines a “severely adverse scenario,” in which global public debt could surge to 115% of GDP within just three years, 20 percentage points higher than current projections.
