Islamabad (Staff Reporter)
The International Monetary Fund (IMF) has warned that global public debt is rising rapidly, emphasizing the urgent need for immediate fiscal reforms to ensure stability amid economic uncertainty and mounting expenditure pressures. This was highlighted in the IMF’s annual debt report.
According to the report, public debt worldwide has already reached historically high levels, surpassing $100 trillion in 2024, and is expected to reach nearly 100 percent of global GDP by the end of this decade. The final figures could be even higher due to persistent fiscal pressures and historically underestimated debt projections.
The report noted that the average global fiscal deficit has reached 5.1 percent of GDP, while public debt has risen to 92.3 percent of GDP. Although about two-thirds of countries expect to stabilize or reduce their debt levels by 2029, debt ratios will remain higher than pre-COVID levels.
Expansive fiscal policies have led to higher risk premiums on government bonds, increasing borrowing costs and slowing economic activity. If not addressed promptly, these pressures could cause serious debt-servicing problems, particularly for vulnerable countries. Currently, 53 percent of low-income developing nations and 23 percent of emerging economies face a debt crisis or are at risk of one.
The IMF report stressed the urgent need for strategic changes in fiscal policies. Countries with limited fiscal space must reprioritize public spending, while those with more flexibility can pursue medium-term expansion strategies.
For aging advanced economies, the IMF recommended promoting welfare reforms and broadening the tax base. Emerging and developing countries were advised to increase revenue through tax reforms, phasing out energy subsidies, and restructuring government expenditures.
The report underscores that proactive fiscal measures are essential to prevent debt-related instability and maintain long-term global economic sustainability.