IMF: By 2028, global public debt will approach 100% of GDP

The level of global public debt is growing at an accelerated pace compared to the pre-pandemic forecast, the International Monetary Fund (IMF) said. According to current data, by 2028 the figure will approach 100% of global GDP. The two largest economies in the world, the United States and China, remain the drivers of growth.

Thus, the US public debt will grow by 3 p.p. annually from 2023. and by 2028 will exceed 135% of the country’s GDP, the IMF predicts. The public debt of the PRC, having started growing from 82.4% of GDP in 2023, will reach 104.9% of GDP by 2028.

In my own report (“Tax Monitoring”April 2023) The IMF warns that the risks associated with the uncontrolled growth of public debt are high, so reducing the debt burden should be a key priority, especially for developing countries.

Analysts of the organization call on national regulators to strengthen crisis management mechanisms and pay attention to the modes of work with troubled financial institutions. The IMF drew attention to the last point in connection with the recent banking shock in the United States.

“The worst crisis possible is a financial crisis that coincided with a sovereign debt crisis. This is what is called the fatal loop. And such loops should be avoided, ”said Reuters Vitor Gaspar, Director of the IMF’s Fiscal Affairs Department.

Mr. Gaspard added that the need for aggressive interest rate hikes, which regulators have used to fight inflation in particular, could be weakened (by curbing demand) by “tighter” fiscal policy.

April macro forecast IMF, in 2023 the growth rate of the global economy in 2023 will slow down to 2.8% (from 3.4% in 2022), in 2024 it will level off to 3%.

More about this – in the material “Kommersant” “The IMF does not expect much from the economy”.

Grigory Leiba