The International Monetary Fund (IMF) has issued a stark warning in its latest Fiscal Monitor report, projecting that global public debt will rise to 95.1% of global GDP in 2025, an increase of 2.8 percentage points from previous estimates, and may reach 99.6% by 2030. Under severe scenarios, debt could exceed 117% of GDP, levels not seen since World War II. The IMF attributes this surge to economic pressures including steep U.S. tariffs, slower economic growth, and increased trade tensions.

The report highlights that the implementation of significant U.S. tariffs and subsequent retaliatory measures have intensified trade tensions, leading to slower economic growth and increased policy uncertainty. These developments strain government budgets, which are also facing demands for higher defense and social spending, as well as increased debt servicing costs. The IMF forecasts global fiscal deficits averaging 5.1% of GDP in 2025.

Vítor Gaspar, Director of the IMF’s Fiscal Affairs Department, emphasized the gravity of the situation, stating that if trade tensions continue to intensify, public debt could rise from 92.3% to 117% of global GDP by 2027, marking the highest level since 1946. He noted that "deficits are high, and global public debt is very high, rising, and risky."

The IMF's projections also indicate that global public debt is expected to exceed $100 trillion in 2024, with the debt-to-GDP ratio approaching 100% by the end of the decade. This trajectory surpasses the previous peak of 98.9% in 2020, which was driven by COVID-19 relief measures. Although there was a subsequent decline, debt levels are now rising again, with projections indicating a return to near-pandemic levels by 2030.

The IMF advises nations to pursue prudent fiscal consolidation to build resilience against future economic shocks. The report emphasizes that delaying fiscal adjustments is costly and risky, as the required correction grows over time. Rebuilding fiscal buffers in a growth-friendly manner and strengthening fiscal governance is essential to ensure sustainable public finances and financial stability.

At the Global Sovereign Debt Roundtable, held during the 2025 spring meetings of the IMF and World Bank, global financial leaders expressed concern over rising debt risks in low-income countries amid growing economic uncertainty. Public debt in these countries, already high before the COVID-19 pandemic, remains a concern, with many nations facing high interest costs and restricted government spending. Progress has been made to allow debt service suspensions for some debtor countries and to clarify terms under the G20 Common Framework. However, more work is needed to enhance debt transparency, management, and investor relations.

The projected rise in global public debt has several social and societal implications. Higher debt levels may lead to increased taxation or reduced public services as governments attempt to manage their debt, potentially affecting social welfare programs and public investment. Fiscal adjustments, if not carefully designed, could disproportionately impact vulnerable populations, exacerbating economic inequality. Elevated debt levels can contribute to financial instability, affecting global markets and potentially leading to economic downturns that impact employment and living standards worldwide.

The IMF's Fiscal Monitor report serves as a critical reminder of the urgent need for coordinated international efforts and sound fiscal policies to address the escalating global public debt and its far-reaching implications.