IMF: Global Public Debt Nears Post-WWII Peak

Global public debt is approaching historic highs not seen since the aftermath of World War II, as fiscal pressures intensify amid geopolitical tensions and rising borrowing costs, the International Monetary Fund warned in its latest Fiscal Monitor Report.

According to the report, global government debt climbed to approximately 94% of GDP in 2025 and is projected to reach 100% by 2029, reflecting what the Fund described as a deteriorating fiscal trajectory driven by structural imbalances and external shocks.

The IMF highlighted the growing impact of the Middle East conflict on public finances, noting that the war has disrupted energy markets and tightened global financial conditions. Governments are increasingly forced to strike a delicate balance between protecting households from rising prices and preserving fiscal sustainability.

The burden is expected to fall disproportionately on energy-importing and low-income countries, where higher fuel and food costs are straining already limited fiscal space. While commodity exporters may benefit, their gains are likely to be less pronounced than in previous cycles.

A key concern flagged in the report is the sharp erosion of global fiscal buffers. The fiscal margin has narrowed dramatically, from over 1% of GDP a decade ago to near zero today, due to structural shifts, including higher permanent spending and weaker revenue generation in major economies.

The IMF warned that risks to the fiscal outlook have intensified since 2025, estimating that global debt under adverse scenarios could rise to 117% of GDP over the next three years.

The report also underscored the vulnerability of emerging markets to oil supply shocks. For oil-importing economies such as Egypt, sovereign borrowing spreads could increase by 40 to 50 basis points, compounding existing debt challenges. In contrast, the impact on oil-exporting nations is expected to be more limited.

In a severe escalation scenario, global public debt could exceed baseline projections by around 4 percentage points of GDP by 2027.

Within this global context, Egypt continues to face significant fiscal pressures. Public debt levels remain elevated at close to 80% of GDP, according to IMF assessments.

Era Dabla-Norris, Deputy Director of the Fund’s Fiscal Affairs Department, has emphasized that maintaining fiscal discipline and advancing structural reforms are critical for improving debt sustainability and strengthening economic resilience.

While inflation may temporarily ease debt ratios, the IMF cautioned that higher interest rates and slower economic growth are likely to outweigh such benefits, particularly for countries heavily reliant on energy imports.