Global public debt reached its pandemic peak at 99.7% of world GDP and then eased to 91.9% in 2022. It is projected to drift higher in 2023 and could move beyond 100% of GDP by the end of the decade. The IMF notes that pressure from the United States and China is a key part of this trajectory, a point highlighted by Vitor Gaspar, Director of the IMF’s Monetary and Capital Markets Department, during a press conference in Marrakech at the IMF’s annual meeting.
“The risk of a broad, systemic wave of sovereign debt defaults remains low,” according to the IMF.
Gaspar explains that the link between public debt and global GDP tends to rise by about one percentage point each year. If not for the influence of the world’s two largest economies, the pace would slow by roughly half a point annually. He adds that a sharper debt rise largely reflects slower growth, higher real interest rates, and a widening budget deficit driven by rising borrowing costs. The takeaway is that global public debt is higher now and is likely to grow faster than pre‑pandemic forecasts.
Gaspar notes that debt vulnerabilities and fiscal constraints remain strong, yet the IMF assessment is that the risk of a systemic debt-default wave remains low.
United States, China and the Eurozone
For the United States, the IMF projects an annual deficit of 8.2% of GDP in 2023, about two percentage points higher than the April projection, followed by a gradual improvement to 7.4% in both 2024 and 2025, and continuing toward 7% in 2028.
This deficit trend translates into a rising debt ratio, predicted to reach 123.3% of GDP in 2023 and climbing to 137.5% by 2028.
China is expected to see a modest deficit correction this year, near 7.1% of GDP, a slight drop from 2022, before deficits tick up again in 2024 and then toward 7.8% in 2028. With this pattern, the country’s debt is projected to rise to about 83% of GDP in 2023 and continue growing, eventually exceeding 100% by 2027 and reaching roughly 104.3% in 2028.
Within the euro area, deficits are forecast to ease over the period, dropping from about 3.4% of GDP in 2023 to around 2.1% in 2028, while the overall debt burden falls from about 89.6% in 2023 to roughly 84.9% in 2028. A gradual improvement is anticipated.
Spain is expected to see a steady decline in public debt, from about 107.3% of GDP in 2023 to around 103.8% in 2028, with the deficit easing to 3% of GDP in 2024 and stabilizing near 3.4% thereafter through 2028.
The “terrible dilemma” of the climate challenge
From the IMF’s vantage point, the decisive factor shaping fiscal paths over the coming years will be how governments balance energy transition costs against climate targets. Projections suggest that meeting those targets could add to debt levels across many countries, potentially ranging between 40% and 50% of GDP by 2050.
To address this, the IMF argues for increased private sector contributions via carbon pricing, with systems design underway across regions such as the European Union. The organization estimates that a well‑crafted price on carbon could limit the debt rise to about 10–15 percentage points of GDP by 2050.
Delaying carbon pricing, the IMF warns, would be costly. Kristalina Georgieva and colleagues note that roughly 50 countries already have carbon pricing plans, and more than 23 are preparing to implement them. While carbon pricing is not universally popular, the IMF emphasizes targeted support for vulnerable households and businesses to offset higher costs as prices rise.
Gaspar also reminded policymakers that the fiscal burden can be softened through well‑designed aid programs for those most affected, ensuring that climate action does not disproportionately hit families or enterprises.