The International Monetary Fund (IMF) has warned that global public debt could exceed the size of the world economy within five years. According to IMF Chief Kristalina Georgieva, this trend is a “sobering reality” for policymakers worldwide. Public debt, which refers to the total debt held by governments, businesses, and households, is projected to exceed 100% of GDP by 2029.

The surge in borrowing is driven by fiscal deficits, pandemic legacies, and rising interest costs in both advanced and emerging economies. Georgieva cautioned that rising debt risks inflating interest costs, pushing up rates, limiting spending, and weakening the global governments’ ability to absorb shocks. This warning comes amid soaring US federal debt, which has hit a record $37 trillion, around 125% of GDP, with interest payments now one of the largest federal expenses, exceeding defense spending.

The administration of President Donald Trump has defended the borrowing as vital for growth and domestic programs, while critics warn it risks a fiscal crunch. The IMF has earlier cautioned that unchecked spending could drive up global borrowing costs and destabilize emerging markets. Georgieva’s remarks also came alongside broader warnings about the global economy, which she said is doing “worse than we need,” noting that deep structural shifts in geopolitics, technology, and demographics have made economic uncertainty “the new normal.”

The IMF projected global growth of 3.0% in 2025 and 3.1% in 2026 in its July 2025 Outlook, slightly above earlier forecasts. However, it warned that fiscal strains, trade fragmentation, and inflated asset prices could derail recovery unless governments curb deficits and rebuild buffers. A new update is expected to be released next week. Georgieva’s warning highlights the need for policymakers to address the growing debt issue and take steps to ensure global economic stability. With the world economy facing numerous challenges, the IMF’s warning serves as a reminder of the importance of prudent fiscal management and cooperation among nations to mitigate potential risks.