Global public debt on the rise: IMF urges strategic reforms for sustainable growth

According to the International Monetary Fund, global debt is set to exceed 100% of GDP by 2029. Smarter spending, fiscal discipline, and structural reforms are needed to ensure long-term economic stability.

Global public debt continues to grow steadily, prompting a strong message from the International Monetary Fund (IMF). In its latest Fiscal Monitor, the IMF projects that by 2029, global debt will surpass 100% of GDP, reaching levels unseen since the end of World War II.

The concern lies not only in the amount of debt but also in the economic environment in which it is increasing. Unlike in the past, when falling interest rates helped ease the cost of debt servicing, today’s rising interest rates are putting growing pressure on public finances. Without action, this trend could threaten global financial stability.

At the heart of the issue are persistent fiscal deficits, driven by government spending that outpaces revenues, along with rising demands for defense, climate response, healthcare, and demographic challenges. Advanced economies such as the United States, Japan, Italy, France, and the United Kingdom are among those with debt levels at or near 100% of their GDP.

While these countries benefit from deep and liquid bond markets that help absorb some of the risk, many emerging and low-income economies face more limited access to financing. Over 50 countries are currently classified as being at high risk of debt distress or already in debt stress.

Rather than broad budget cuts, the IMF recommends a more strategic and efficient approach to public spending. Redirecting even 1% of GDP from current spending to long-term investments—such as in infrastructure, education, and innovation—could boost GDP by more than 3% by 2050 in advanced economies, and even more in developing ones.

Achieving this shift requires closing significant efficiency gaps in public spending, improving transparency, fighting corruption, and modernizing public financial management systems. Key measures include adopting multi-year budgeting, enhancing digital tools, and carefully involving the private sector in investment projects.

The IMF also highlights the importance of reforming pension and healthcare systems to free up resources and better target social support, especially in vulnerable countries. When designed effectively, these reforms can promote both fiscal sustainability and greater equity, challenging the notion that economic growth and social justice are at odds.

The bottom line: governments need to act decisively and proactively. The sustainability of public debt is not merely a technical issue—it is a matter of public trust and long-term economic resilience. The path forward, the IMF argues, lies in well-calibrated reforms and smarter investment choices that support a more stable and inclusive global economy.