The International Monetary Fund (IMF) reported on Tuesday that global public debt is projected to reach a staggering $100 trillion in 2024, indicating a worsening fiscal outlook for many nations.
According to the latest fiscal policy report, global public debt is expected to hit 93 percent of the global gross domestic product (GDP) this year and could approach 100 percent by 2030, marking a 10 percentage point increase from 2019, prior to the onset of the Covid-19 pandemic.
Era Dabla-Norris, the deputy director of the IMF’s Fiscal Affairs Department, highlighted the seriousness of the situation, stating, “Global public debt is very high.” She emphasized that the debt outlook might be worse than anticipated, citing spending pressures related to climate change, overly optimistic debt projections, and the potential for undisclosed debt.
Dabla-Norris urged countries to take decisive action, stating, “It’s time for countries to get their fiscal house in order.”
The IMF introduced a new “debt-at-risk” framework in its report to better assess risks associated with debt projections. In a worst-case scenario, global public debt could rise to 115 percent of GDP by 2026, nearly 20 percentage points above the Fund’s baseline estimates.
The report also noted that fluctuations in government borrowing costs are increasingly influenced by global factors, suggesting that high debt levels in key countries could elevate volatility in sovereign yields and debt risks for others.
The IMF indicated that the current environment of moderating inflation and interest rate cuts presents a favorable opportunity for nations to rebuild their fiscal buffers. The organization believes that countries are now in a better position to handle the effects of fiscal tightening.
To regain control of global public debt, the IMF estimates that fiscal adjustments of between 3.0 and 4.5 percent of GDP will be necessary on average, nearly double the size of past adjustments.
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