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The International Monetary Fund (IMF) has said it sees countries debt growing above 100% of global GDP. This disclosure was made Wednesday by Vitor Gaspar, head of the IMF’s Fiscal Affairs Department, ahead of the launch of the Fiscal Monitor report today at the ongoing IMF/World Bank 2024 Annual Meetings in Washington, DC.

A 2022 data by IMF showed the gross public debt of countries as a percentage of GDP. The US figure was 121.31%, China 76.98%, Japan 261.29%, and India 83.13%.
 
According to IMF’s Fiscal Monitor October 2024, entitled “Putting a Lid on Public Debt,” global public debt is elevated, and it is projected to exceed $100 trillion in 2024 and will rise over the medium term.

“Deficits are high and global public debt is very high and rising. If it continues at the current pace, the global debt-to-GDP ratio will approach 100% by the end of the decade, rising above the pandemic peak,” said Gaspar about the main message from the report.
 
The report shows that the risks to the debt outlook are heavily tilted to the upside. In a severely adverse scenario, global debt is estimated to be nearly 20 percentage points of GDP higher three years ahead than the baseline projection, reaching 115 percent of GDP.

The Fiscal Monitor highlights new tools to help policymakers determining the risk of high levels of debt. “Assessing and managing public debt risks is a major task for policymakers,” according to the report, which says the Debt at Risk Framework of the Fiscal Monitor is a major contribution.

The framework considers the distribution of outcomes around the most likely scenario. It offers help to policymakers to take preemptive action to avoid the most adverse outcomes.
 
Gaspar said that there’s a careful balance between keeping debt lower, versus necessary spending on people, infrastructure, and social priorities.
 
The Fiscal Monitor identifies three main drivers of debt risks. The first is spending pressures from long-term underlying trends, but also challenging politics at national, continental, and global levels. The second pertains to optimistic bias in debt projections, and the third relates to increasing uncertainty associated with economic, financial, and political developments.

Amongst its recommendations, the report advises countries to get started on getting debt under control and to keep at it, saying “waiting is risky. The longer you wait, the greater the risk the debt becomes unsustainable.”

The reports also advises that countries that can afford it should avoid cutting debt too much, too fast to avoid hurting growth and jobs. The IMF says this is why, in many cases, it recommends an enduring but gradual fiscal adjustment.

In a concluding statement on the report, the IMF said: “Much larger fiscal adjustments than currently planned are required to stabilise (or reduce) debt with high probability. Now is an opportune time for rebuilding fiscal buffers and delaying is costly. Rebuilding fiscal buffers in a growth-friendly manner and strengthening fiscal governance is essential to ensure sustainable public finances and financial stability.”