Rapid Fire
Increase in Global Public Debt by 2030
- 19 Oct 2024
- 2 min read
According to the latest report of the International Monetary Fund (IMF) on fiscal policy, global public debt is expected to reach a record USD 100 trillion.
- Key Highlights of the Report:
- Global public debt is expected to reach 93% of global GDP in 2024, and to approach 100% by 2030.
- The IMF introduced a "debt-at-risk" method to better assess uncertainties in debt projections, estimating that global public debt could surge to 115% of GDP by 2026 in a worst-case scenario.
- Fluctuations in government borrowing costs are increasingly driven by global factors.
- Implying that high debt levels in major countries could raise the volatility of sovereign yields and debt risks in other countries.
- Recommendation:
- Countries should use the current period of lower inflation and interest rate cuts to strengthen their financial reserves.
- Countries need to implement fiscal adjustments between 3.0% and 4.5% of GDP to bring global public debt under control.
- IMF came into formal existence in December 1945. It was set up along with the World Bank after World War II to assist in the reconstruction of war-ravaged countries.
- IMF and WB agreed to be set up at a conference in Bretton Woods in the US. Hence, they are known as the Bretton Woods twins.
- Its primary purpose is to ensure the stability of the international monetary system.
- Major reports of the IMF: Global Financial Stability Report and World Economic Outlook.
Read More: Financial Stability Report, June 2024
