Global debt to hit 100% of GDP by 2029, warns IMF as war adds fiscal strain
In its latest Fiscal Monitor, the IMF flags a steady deterioration in public finances despite a resilient global economy. Debt levels climbed to nearly 94% of GDP in 2025 and are expected to continue rising, driven by persistent deficits, higher interest costs, and new geopolitical shocks.
- Apr 15, 2026,
- Updated Apr 15, 2026 6:30 PM IST
Global public debt is set to rise to alarming levels, with the International Monetary Fund warning that it could touch 100% of global GDP by 2029, as fiscal pressures intensify across advanced and emerging economies.
In its latest Fiscal Monitor, the IMF flags a steady deterioration in public finances despite a resilient global economy. Debt levels climbed to nearly 94% of GDP in 2025 and are expected to continue rising, driven by persistent deficits, higher interest costs, and new geopolitical shocks.
A key trigger worsening the outlook is the ongoing Middle East conflict, which has disrupted energy markets and tightened financial conditions globally. Governments are increasingly being forced to choose between shielding households from rising fuel and food prices and maintaining fiscal discipline. The burden is falling disproportionately on energy-importing and low-income countries, which face higher import bills and limited fiscal space.
Within this landscape, India emerges as a relative bright spot. Along with Mexico and Türkiye, India recorded an improvement in its fiscal position, supported by restraint in primary spending. The IMF also notes that India’s debt trajectory is expected to stabilise or decline over time, aided by strong nominal GDP growth and ongoing fiscal consolidation efforts.
However, challenges remain. India’s debt-to-GDP ratio is still elevated, above 84% and the country remains exposed to global risks. Higher energy prices, tighter global liquidity, and volatile capital flows could complicate fiscal management, particularly if geopolitical tensions persist.
The IMF highlights that the global fiscal cushion has effectively eroded. A decade ago, countries had some room to stabilise debt levels, but today that buffer has shrunk to near zero. At the same time, rising borrowing costs are compounding the challenge.
Interest payments have increased sharply, from about 2% to nearly 3% of global GDP in just four years, as governments refinance debt at higher rates.
ALSO READ: IMF cuts global growth forecast amid West Asia conflict
Large economies remain central to the global debt story. The United States continues to run deficits of 7–8% of GDP, even as its debt is projected to rise to 142% of GDP by 2031.
China is also witnessing rising deficits as it supports domestic demand, with debt expected to approach 127% of GDP over the same period. Meanwhile, parts of the European Union are loosening fiscal rules to accommodate increased defence spending.
The IMF warns that risks are tilted firmly to the downside. In adverse scenarios, such as prolonged conflict or financial market corrections, global debt could rise even faster, amplifying vulnerabilities.
Global public debt is set to rise to alarming levels, with the International Monetary Fund warning that it could touch 100% of global GDP by 2029, as fiscal pressures intensify across advanced and emerging economies.
In its latest Fiscal Monitor, the IMF flags a steady deterioration in public finances despite a resilient global economy. Debt levels climbed to nearly 94% of GDP in 2025 and are expected to continue rising, driven by persistent deficits, higher interest costs, and new geopolitical shocks.
A key trigger worsening the outlook is the ongoing Middle East conflict, which has disrupted energy markets and tightened financial conditions globally. Governments are increasingly being forced to choose between shielding households from rising fuel and food prices and maintaining fiscal discipline. The burden is falling disproportionately on energy-importing and low-income countries, which face higher import bills and limited fiscal space.
Within this landscape, India emerges as a relative bright spot. Along with Mexico and Türkiye, India recorded an improvement in its fiscal position, supported by restraint in primary spending. The IMF also notes that India’s debt trajectory is expected to stabilise or decline over time, aided by strong nominal GDP growth and ongoing fiscal consolidation efforts.
However, challenges remain. India’s debt-to-GDP ratio is still elevated, above 84% and the country remains exposed to global risks. Higher energy prices, tighter global liquidity, and volatile capital flows could complicate fiscal management, particularly if geopolitical tensions persist.
The IMF highlights that the global fiscal cushion has effectively eroded. A decade ago, countries had some room to stabilise debt levels, but today that buffer has shrunk to near zero. At the same time, rising borrowing costs are compounding the challenge.
Interest payments have increased sharply, from about 2% to nearly 3% of global GDP in just four years, as governments refinance debt at higher rates.
ALSO READ: IMF cuts global growth forecast amid West Asia conflict
Large economies remain central to the global debt story. The United States continues to run deficits of 7–8% of GDP, even as its debt is projected to rise to 142% of GDP by 2031.
China is also witnessing rising deficits as it supports domestic demand, with debt expected to approach 127% of GDP over the same period. Meanwhile, parts of the European Union are loosening fiscal rules to accommodate increased defence spending.
The IMF warns that risks are tilted firmly to the downside. In adverse scenarios, such as prolonged conflict or financial market corrections, global debt could rise even faster, amplifying vulnerabilities.