The International Monetary Fund (IMF) announced on Tuesday that the trajectory of global public debt was critical. “There are good reasons to believe that the situation is even worse than expected,” declared the IMF while the debt could reach 100,000 billion dollars by the end of the year.
A critical situation. In its latest public finance monitoring report, the International Monetary Fund (IMF) indicated this Tuesday, October 15 that global public debt should reach 100,000 billion dollars by the end of the year, or 93% of the global gross domestic product (GDP).
In percentage terms, there is no increase, with public debt having already reached 93% of GDP in 2023, but it is increasing in value. Above all, the trend is not about to be reversed. According to the financial institution, public debt will represent 100% of global GDP by 2030.
In comparison, at the end of 2023, the private debt of households and non-financial private companies already represented 146% of global GDP according to the IMF.
Not very optimistic projections
“There are good reasons to think that the situation is even worse than expected,” said Era Dabla-Norris, deputy director of the budgetary affairs department at the IMF during a press conference.
“Experience reminds us that debt projections tend to be too optimistic, either because governments are so optimistic about their growth forecasts, or because budgetary reforms are never fully realized,” he said. she added.
In order to allow a real reduction in public debt, an increase of 3.8% of GDP would be necessary each year between now and 2030, compared to 1% envisaged so far. However, a reduction in public spending that is too drastic and poorly managed could lead to an increase in inequalities.
According to the World Bank, around forty countries are currently in or close to a debt crisis.
