IMF: Global debt will exceed GDP in 2029

The International Monetary Fund has warned that global public debt will surpass GDP two years earlier than previously expected, and the US debt path has been explicitly named as "unsustainable," significantly increasing the urgency of global fiscal consolidation.

Speaking at an economic forum hosted by the Qatari government in New York on the 20th, IMF Managing Director Kristalina Georgieva stated that countries have not done nearly enough to consolidate their fiscal positions. According to Bloomberg, she pointed out that the IMF's latest forecast shows that, driven by the rapid rise in government borrowing in countries like the United States, global public debt will exceed 100% of global GDP in 2029, a full two years earlier than previously expected.

Regarding US fiscal issues, Georgieva stated that she had held specific discussions with US Treasury Secretary Scott Bessent, and both agreed that the current US debt structure is unsustainable and that the US needs to gradually reduce its budget deficit and debt. At the same time, she warned that the Middle East conflict could impact the global economy and positively assessed Qatar's ability to withstand such shocks thanks to its ample fiscal buffer.

The debt warning line was reached ahead of schedule, with government borrowing in the United States and other countries being the main reason.

The IMF's recent upgrade of its debt risk warning is primarily based on the rapid expansion of government borrowing in countries like the United States. According to the latest forecast, the global public debt-to-GDP ratio will surpass the critical threshold of 100% in 2029, two years earlier than previously expected.

At the forum, Georgieva stated bluntly: "We have long warned of the necessity of fiscal consolidation, and everyone knows it must be done, but the actual actions taken are far from sufficient." This wording is unusual in that it directly points out the collective failure of governments to uphold fiscal discipline.

Of all major economies, the United States has received the most explicit attention from the IMF. Georgieva stated that she had a special discussion with Treasury Secretary Bessenter regarding US fiscal issues, and the two sides reached a consensus: the current US debt structure is unsustainable and requires a gradual reduction in the budget deficit and debt level.

In fact, Georgieva had already issued a warning last month, pointing out that most developed economies, including the United States, are on a debt trajectory that requires extra caution. This renewed public statement following direct talks with the US Treasury Secretary demonstrates the IMF's deepening concern about the direction of US finances.

The IMF has identified monetary policy as another key variable that could further increase the debt burden. Georgieva points out that global inflationary pressures remain persistent, and major central banks such as the Federal Reserve and the European Central Bank may need to raise interest rates further.

Rising interest rates will directly increase government financing costs, putting governments already burdened with heavy debt under greater pressure to pay interest, thus creating a negative cycle of "high debt - high interest rates - higher debt costs," further compressing the fiscal maneuvering space of various countries.

Georgieva also warned of the potential impact of the situation in the Middle East on the global economy. She stated that the conflict between Iran and the United States could lead to significant economic contractions in major commodity-producing countries such as Qatar, Kuwait, and Iraq.

However, her assessment of Qatar is relatively optimistic. Georgieva points out that Qatar was the world's second-largest exporter of liquefied natural gas before the war and had accumulated a considerable economic buffer. These reserves are currently effectively helping it withstand the external shocks brought about by the conflict, providing a certain reference model for other resource-based economies.

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