IMF "Global Public Debt to Exceed $100 Trillion This Year"

Major Countries Including the U.S. Desire Increased Spending

The International Monetary Fund (IMF) projected on the 14th (local time) that the total global public debt will surpass $100 trillion (approximately 13,630 quadrillion won) for the first time in history this year.

In its latest Fiscal Monitor report released that day, the IMF stated, "(The global) political climate favors high spending, and the low-growth trend increases borrowing demand and costs," forecasting accordingly.

According to the IMF, global public debt is expected to reach 93% of the world’s Gross Domestic Product (GDP) by the end of this year. This is 10 percentage points higher than the 83% recorded in 2019, before the COVID-19 pandemic.

By 2030, global public debt is expected to approach 100% of GDP, exceeding the 99% recorded in 2020, the first year of the COVID-19 pandemic. The IMF based this analysis on the fact that major economies like the United States desire high spending. With the U.S. presidential election just three weeks away, both Democratic presidential candidate Vice President Kamala Harris and Republican presidential candidate former President Donald Trump are actively promoting tax cut pledges that could worsen the national finances.

Additionally, the IMF pointed to increasing spending pressures to address global agendas such as environmental sustainability, aging populations, and security as factors contributing to the rise in public debt.

The IMF also noted that its forecast of the total global public debt disclosed in this report may have underestimated the actual total public debt. According to the IMF, the actual total public debt relative to GDP has tended to be on average 10% higher than the total amount the IMF predicted five years earlier. The IMF further projected that global public debt relative to GDP could reach 115% within three years, which is 20 percentage points higher than the current forecast.

The IMF emphasized the need for fiscal tightening to reduce national debt for governments worldwide. Eran Dabla-Norris, Deputy Director of the IMF, stated, "High debt and the absence of credible fiscal plans can trigger negative market reactions and weaken national response capabilities," adding, "Since cuts in public investment and social spending have a greater adverse impact on economic growth, the tax system must be improved."