Global debt to exceed economy size by 2029 warns IMF chief

The International Monetary Fund (IMF) has warned that global public debt could exceed the size of the world economy within five years. IMF chief Kristalina Georgieva described this trend as a “sobering reality” for policymakers worldwide. Public debt— the total debt held by governments, businesses, and households— is projected to surpass 100 % of global 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 could inflate interest costs, push up rates, limit spending, and weaken governments’ ability to absorb shocks. Her warning comes amid soaring U.S. federal debt, which has hit a record $37 trillion—about 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 previously cautioned that unchecked spending could drive up global borrowing costs and destabilize emerging markets. Georgieva’s remarks were accompanied by broader warnings about the global economy, which she said is performing “worse than we need.” She noted that deep structural shifts in geopolitics, technology, and demographics have made economic uncertainty “the new normal.”

In its July 2025 Outlook, the IMF projected global growth of 3.0 % in 2025 and 3.1 % in 2026, slightly above earlier forecasts. However, it warned that fiscal strains, trade fragmentation, and inflated asset prices could derail the recovery unless governments curb deficits and rebuild buffers. A new update is expected next week.

Georgieva’s warning underscores 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 alert serves as a reminder of the importance of prudent fiscal management and international cooperation to mitigate potential risks.