IMF Says Global Public Debt to Top $100 Trillion, Growth May Accelerate

Motorists commute as a construction site is seen in Beijing on October 12, 2024. (AFP)
Motorists commute as a construction site is seen in Beijing on October 12, 2024. (AFP)
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IMF Says Global Public Debt to Top $100 Trillion, Growth May Accelerate

Motorists commute as a construction site is seen in Beijing on October 12, 2024. (AFP)
Motorists commute as a construction site is seen in Beijing on October 12, 2024. (AFP)

The world's total public debt is set to exceed $100 trillion this year for the first time, and may grow more quickly than forecast as political sentiment favors higher spending and slow growth amplifies borrowing needs and costs, the International Monetary Fund said on Tuesday.

The IMF's latest Fiscal Monitor report showed global public debt will reach 93% of global gross domestic product by the end of 2024 and approach 100% by 2030. That would exceed its 99% peak during COVID-19. It would also be up 10 percentage points from 2019, before the pandemic exploded government spending.

Released a week before the IMF and World Bank hold annual meetings in Washington, the Fiscal Monitor said there are good reasons to believe future debt levels could be well higher than currently projected, including a desire to spend more in the US, the world's largest economy.

"Fiscal policy uncertainty has increased, and political red lines on taxation have become more entrenched," the IMF said in the report. "Spending pressures to address green transitions, population aging, security concerns, and long-standing development challenges are mounting."

CAMPAIGN SPENDING PROMISES

The IMF's concerns about rising debt levels comes three weeks before a US presidential election in which both candidates have promised new tax breaks and spending that could add trillions of dollars to federal deficits.

Republican presidential candidate Donald Trump's tax cut plans would add some $7.5 trillion in new debt over 10 years, more than twice the $3.5 trillion added from the plans of Vice President Kamala Harris, the Democratic nominee, according to the central estimates the Committee for a Responsible Federal Budget (CRFB), a budget think-tank.

The report finds that debt projections tend to underestimate actual outcomes by sizeable margins, with realized debt to GDP ratios five years ahead averaging 10% higher than originally forecast.

And debt could be further increased significantly by weak growth, tighter financing conditions and greater fiscal and monetary policy uncertainty in systemically important economies such as the US and China. The report includes a "severely adverse scenario" involving these factors that shows global public debt could reach 115% in just three years, 20 percentage points higher than currently projected.

SPENDING BRAKES

The IMF repeated its calls for more fiscal consolidation, saying the current environment with solid growth and low unemployment was an opportune time to do so. But it said current efforts, averaging 1% of GDP over the six years from 2023 to 2029, are insufficient to reduce or stabilize debts with a high probability.

A cumulative tightening of 3.8% would be needed to achieve this goal, but in the US, China, and other countries where of GDP is not forecast to stabilize, substantially greater fiscal tightening would be needed.

The US this month is expected report a fiscal 2024 deficit of about $1.8 trillion, or more than 6.5% of GDP, according to the Congressional Budget Office.

It said the US and other countries where debt is projected to keep growing, including Brazil, Britain, France, Italy and South Africa, could face costly consequences.

"Postponing adjustment will only mean that a larger correction is needed eventually, and waiting can also be risky, because past experience shows that high debt and lack of credible fiscal plans can trigger adverse market reactions and can limit the room that countries have to deal with future shocks," said Era Dabla-Norris, the IMF's deputy fiscal affairs director.

She said cuts in public investment or social spending, tend to have a much larger negative impact on growth, than more poorly targeted subsidies such as for fuel. Some countries have room to broaden their tax bases and improve the efficiency of tax collections, while others can make their tax systems more progressive by taxing capital gains and income more effectively, Dabla-Norris said.



Oil Falls as Iran Affirms Commitment to Nuclear Treaty

A view of the Chevron oil refinery in Richmond, California, USA, 27 June 2025. EPA/JOHN G. MABANGLO
A view of the Chevron oil refinery in Richmond, California, USA, 27 June 2025. EPA/JOHN G. MABANGLO
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Oil Falls as Iran Affirms Commitment to Nuclear Treaty

A view of the Chevron oil refinery in Richmond, California, USA, 27 June 2025. EPA/JOHN G. MABANGLO
A view of the Chevron oil refinery in Richmond, California, USA, 27 June 2025. EPA/JOHN G. MABANGLO

Oil futures fell on Friday after Iran reaffirmed its commitment to nuclear non-proliferation and amid expectations that major producers are set to agree to raise their output this weekend.

Brent crude futures were down 22 cents, or 0.32%, to $68.58 a barrel by 0445 GMT, while US West Texas Intermediate crude fell 12 cents, or 0.18%, to $66.88.

Trade was thinned by the US Independence Day holiday.

US news website Axios reported on Thursday that the US was planning to meet with Iran next week to restart nuclear talk, while Iran Foreign Minister Abbas Araghchi said Tehran remains committed to the nuclear Non-Proliferation Treaty.

"Thursday's news that the US is preparing to resume nuclear talks with Iran, and Araghchi’s clarification that cooperation with the UN atomic agency has not been halted considerably eases the threat of a fresh outbreak of hostilities," said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Araghchi's comments came a day after Tehran enacted a law suspending cooperation with the UN nuclear watchdog, the International Atomic Energy Agency.

"But the price correction may have to wait till Monday, when the US reopens from a long weekend and takes in Sunday's OPEC+ decision, which is likely to be another 411,000 barrels per day target hike in August," Hari said.

OPEC+, the world's largest group of oil producers, is set to announce an increase of 411,000 bpd in production for August as it looks to regain market share, four delegates from the group told Reuters.

Meanwhile, uncertainty over US tariff policies was renewed as the end of a 90-day pause on higher levy rates approaches.

Washington will start sending letters to countries on Friday specifying what tariff rates they will face on goods sent to the United States, a clear shift from earlier pledges to strike scores of individual trade deals.

President Donald Trump told reporters before departing for Iowa on Thursday that the letters would be sent to 10 countries at a time, laying out tariff rates of 20% to 30%.

Trump's 90-day pause on higher US tariffs ends on July 9, and several large trading partners have yet to clinch trade deals, including the European Union and Japan.

The US imposed sanctions on Thursday against a network that smuggles Iranian oil disguised as Iraqi oil and on a Hezbollah-controlled financial institution, the Treasury Department said.

Trump also said on Thursday that he would meet with representatives of Iran "if necessary".

Separately, Barclays said it raised its Brent oil price forecast by $6 to $72 per barrel for 2025 and by $10 to $70 a barrel for 2026 on an improved outlook for demand.