IMF warns: global public debt heading towards 100% of GDP

The Managing Director of the International Monetary Fund, Kristalina Georgieva, has warned that global public debt is set to exceed 100% of world gross domestic product. She made the statement ahead of the IMF and World Bank annual meetings, scheduled in Bangkok, according to ANSA and Sky TG24.

The context cited by Georgieva is that of energy price increases linked to tensions in the Middle East, which according to the director have contributed to pushing ten-year government bond yields in the United States, Germany and Japan to their highest levels in decades. A higher yield means a greater cost for governments to refinance existing debt and to issue new debt: the more a state pays to borrow, the more public budget resources are absorbed by interest payments rather than other spending items.

In her remarks, as reported by the two agencies, Georgieva called on governments to present credible fiscal consolidation plans, meaning policies to reduce the gap between state revenues and expenditures. The available sources do not disclose a precise deadline indicated by the IMF for reaching the 100% threshold, nor a country-by-country breakdown of the forecast: the alarm, as reported, concerns the aggregate trajectory of world debt, not a specific projection for individual economies.

The IMF and World Bank annual meetings in Bangkok represent the venue where these indications will be discussed with finance ministers and central bank governors from member countries. It remains to be seen, in the coming days, whether specific fiscal commitments from the major economies will emerge from the meeting or whether the alarm will remain, for now, a risk notice without agreed measures.