Increase in Global Public Debt by 2030 | 19 Oct 2024

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.