IMF Projects Global Debt to Hit 117% of GDP Amid Trade Policy Turmoil

COLOMBO (News 1st); Global debt is on a rising path following trade and market turmoil, the IMF announced in the Fiscal Monitor Report released Wednesday (April 23) in Washington, DC.

Vitor Gaspar, Director of the Fiscal Affairs Department at the International Monetary Fund (IMF), issued a stark warning about the escalating global public debt and the unprecedented economic risks facing the world.

Gaspar highlighted that global public debt surpassed $100 trillion in 2024, a figure that made headlines six months ago.

According to IMF projections, this debt is expected to continue rising, approaching 100 percent of global GDP by the end of the decade.

Vitor Gaspar, Director of the Fiscal Affairs Department at the International Monetary Fund (IMF), also issued a stark warning about the deteriorating global economic prospects and the rising risks to the economic outlook.

According to the World Economic Outlook (WEO) reference projection, global public debt will exceed 95 percent of GDP in 2025 and approach 100 percent of GDP by the end of the decade, surpassing the pandemic peak. This alarming trend is accompanied by significant uncertainty and weakening confidence in financial markets, which have partially corrected and tightened financing conditions.

Gaspar emphasized the wide diversity in debt levels across countries, with 119 countries showing higher public debt compared to pre-pandemic levels. He noted that fiscal policies must be tailored to country-specific factors and circumstances, but resilience is needed everywhere in the face of turbulent times ahead.

Gaspar pointed out that 59 countries, representing 80 percent of world GDP, have public debt that is higher and rising faster. These countries are the main drivers of global trends. In contrast, the remaining 116 countries, representing about 20 percent of world GDP, have aggregate public debt well below pandemic levels, indicating a stabilization at high levels.

Gaspar reiterated the Managing Director's statement that "trade policy uncertainty is off the charts," and warned that upside risks to public debt projections dominate the outlook. The IMF's public debt at risk tool projects global public debt to reach 117 percent of GDP in a severe adverse scenario within three years.

In response to these challenges, Gaspar urged Ministers of Finance to act urgently and decisively, emphasizing three policy priorities: integrating fiscal policy into overall stability-oriented macroeconomic policies, reducing public debt and rebuilding buffers, and improving potential growth to ease policy tradeoffs. He stressed that fiscal policy must be an anchor for confidence and stability, contributing to a competitive economy that delivers growth and prosperity for all.