Global public debt will surpass 100 trillion Dollars in 2024 !

As the global economy is still trying to recover from successive crises, a new announcement from the IMF reveals a mixed trend: global public debt will reach $100 trillion by the end of 2024. This staggering amount, equivalent to 93 % of global GDP, constitutes a critical point in the budgetary management of states. The world now finds itself at a crossroads where managing this colossal debt becomes more critical than ever.

IMF warnings on the inevitable rise of debt

The IMF revealed in its Fiscal Monitor report that global public debt is expected to cross the $100 trillion mark by the end of 2024. “If, as in 2023, it is expected to represent this year 93 % of global GDP, it continues to rise and concerns our forecasts,” said Era Dabla-Norris, deputy director of the IMF’s fiscal affairs department. The institution even anticipates that this ratio will reach 100 % of global GDP by the end of the decade. Such a trend seems difficult to reverse. According to the IMF, this increase is directly linked to the accumulation of crises since the Covid-19 pandemic, which disrupted global economies with increased public spending.

Aside from the direct impacts of the pandemic, several major economic powers, notably the United States and China, continue to see their debt grow without showing concrete signs of stabilization. The IMF report highlights that an annual reduction in public debt by 3.8 % of GDP would be necessary to reverse this trend by 2030. However, the budgetary adjustments announced so far, which are closer to 1% of GDP, are not enough to halt the current progression. Also, this divergence between forecasts and reality heightens the IMF’s concerns about the long-term sustainability of public debts.

Direct consequences on global growth and inequalities

The inexorable rise of global public debt poses not only budgetary sustainability problems, but it also threatens to hinder long-term economic growth. Indeed, the IMF warns that a poorly calibrated reduction in public spending could have dramatic repercussions on economic growth, especially in developing countries. “A significant reduction in public spending could lead to increased inequalities and greater pressure on the most vulnerable populations,” the report warned. Furthermore, it highlights the delicate balance that governments must find in managing their public finances.

Moreover, the poorest countries, already hard hit by the pandemic, continue to suffer the adverse effects of a record debt level. The World Bank estimates that to achieve their development goals, these nations should invest the equivalent of 8 % of their GDP each year, a goal hardly achievable without massive external assistance. This context reinforces the need for states to restructure their finances, and to continue investing in essential sectors like combating climate change and reducing inequalities. The prospects, though complex, involve rigorous public finance management to avoid another global crisis.

World public debt is approaching a point of no return. As states attempt to reconcile economic growth with debt reduction, challenges continue to mount. Budgetary adjustments will be crucial to avoid an even more severe crisis, but these must be carried out cautiously so as not to compromise the necessary investments in key sectors. Thus, the coming decade promises to be decisive, and governments will need to act swiftly to prevent global debt from becoming an insurmountable burden.