IMF: Global public debt over 100 per cent of GDP in 2029
For the Monetary Fund, the ratio will rise to its highest level since 1948. "Starting with deficits and debt that are too high, the persistence of spending above tax revenues will push spending to ever higher levels, threatening financial sustainability and stability"
from our correspondent Gianluca Di Donfrancesco
WASHINGTON - Global public debt is accelerating: it will exceed 100 per cent of GDP as early as 2029, according to new projections by the Monetary Fund, contained in the Fiscal Monitor published on 15 October. In April, the institute predicted that global debt would come within a whisker of 100 per cent in 2030.
Changing dynamics
In this scenario, the debt-to-GDP ratio rises to its highest level since 1948. It is not only the size that matters, but also the cost of debt, the Fund emphasises. The years between the global financial crisis and the Covid pandemic were characterised by unusually favourable conditions, with interest rates falling sharply. However, the situation is now very different. Rates have risen and the path of decline is uncertain.
Moreover, looming or announced spending on defence, natural disasters, technology, demographics and development increase the pressure on public spending. In contrast, the squeeze on taxes is a red line that politics does not want to cross.
The conclusion, for the Fund, is inescapable: "Starting with excessively high deficits and debt, the persistence of spending above tax revenues will push debt to ever higher levels, threatening financial sustainability and stability".
Among the advanced countries with the highest public debt, the United States will exceed 143% of GDP in 2030 from 122% in 2024. In 2017 they were below 107%. Overtaking Italy (137% in 2030 from 135% in 2024) is expected to take place in 2029.
