IMF Warns Global Debt Could Top 100% of GDP by 2029

According to the IMF’s Fiscal Monitor report (October 2025), global debt is projected to surpass 100% of GDP within four years, with a 5% risk scenario in which it could climb to 123%.

The acceleration isn’t entirely unexpected, debt levels have been rising steadily since the 2008 financial crisis, but the pace and magnitude of today’s increase are alarming. The surge is driven by massive spending during the COVID-19 pandemic, ongoing wars, and escalating defense and climate-related costs.

The IMF notes that the trajectory of public debt has become “steeper and higher” than pre-pandemic projections, raising serious concerns about fiscal sustainability.

The current trend reflects a convergence of structural and temporary forces:

Higher Interest Rates, After a decade of ultra-loose monetary policy, global rates have risen sharply, pushing the cost of debt servicing from 2% of global GDP to 2.9% by 2025, with further increases expected through the decade.

Escalating Spending Pressures, Governments face growing fiscal demands from defense budgets, climate adaptation, aging populations, and investment in disruptive technologies such as artificial intelligence.

Persistent Fiscal Deficits, Most nations continue to spend beyond their means, hesitant to raise taxes amid political resistance and social pressures.

Together, these factors form a vicious debt cycle, where borrowing fuels more borrowing, making the IMF’s 2029 forecast not just plausible but inevitable without intervention.

If debt levels continue on this path, the world could face a new global financial crisis, akin to the European sovereign debt crisis of 2010.

Once public debt surpasses 100% of GDP, bond markets come under pressure, borrowing costs soar, and investor confidence wanes, choking economic growth and widening the wealth gap between advanced and developing nations.

For emerging economies, the impact could be devastating. Shrinking access to external financing would force governments to slash social and infrastructure spending, deepening poverty and heightening the risk of social unrest.

United States

Debt is expected to exceed 140% of GDP by 2029, driven by surging defense and interest payments, constraining fiscal flexibility.

China

Debt could rise to 113%, as sluggish growth and real estate support measures strain public finances.

Japan

Already burdened with the world’s highest debt ratio, Japan is projected to hit 222.2%, pressured by its aging population.

Eurozone

Expected to reach 91.3%, with fiscal imbalances in France and Italy threatening regional cohesion.

United Kingdom

Projected at 105.9%, the U.K. faces calls for bold tax reform to prevent a prolonged downturn.

These figures reveal a global economy balanced on a fiscal knife’s edge, where one major shock could cascade across markets.

The IMF’s forecast for 2029 is not merely a warning, it’s a plea for action. Governments must act now to strengthen fiscal discipline, expand tax bases, and improve spending efficiency to rebuild buffers against future shocks. Waiting is not an option. The longer policymakers delay, the heavier the cost of inaction becomes.