As world debt hits $100T, IMF warns deficit buildup must be brought under control

The debt owed by governments around the world will surpass $100 trillion by year-end and is an increasing threat to the global economy, the International Monetary Fund warned on Tuesday.

The IMF said worldwide public debt is expected to reach 93 percent of global gross domestic product in 2024, and will close in on the 100-percent mark by the end of the decade.

“[S]ustained debt buildups can raise the probability of debt distress or broader financial crisis,” the global finance watchdog wrote in the latest edition of its semi-annual Fiscal Monitor report.

In a veiled swipe at the United States — whose budget deficit is likely to top 6 percent of GDP this year, despite ongoing robust economic growth — the Fund said buildups of indebtedness in key states in the economic order could easily spill over and affect nations that are whittling down their debt piles. It noted that such global factors have become increasingly prominent in setting market interest rates worldwide.

Global budget deficits widened during the pandemic as governments rushed to support the incomes of those affected by lockdowns. They then came under fresh pressure — particularly in Europe — as Russia’s invasion of Ukraine in 2022 triggered a huge spike in energy prices. Aging populations, investments in the green transition and an end to the post-Cold War ‘peace dividend’ appear set to ensure that fiscal policy remains under pressure for the foreseeable future.

Leave a Comment