As global debt nears US$100 trillion, IMF urges action

International Monetary Fund economists warn that failure to address rising debt could lead to ‘significant spillovers’ for the world economy

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International Monetary Fund headquarters in Washington ahead of the 2024 IMF/World Bank Annual Meetings this week. Photo: AFP

Published: 1:06pm, 20 Oct 2024

Even before global finance chiefs fly into Washington over the next few days, they’ve been urged in advance by the International Monetary Fund to tighten their belts.

Two weeks ahead of a potentially era-defining US election, and with the world’s recent inflation crisis barely behind it, ministers and central bankers gathering in the nation’s capital face intensifying calls to get their fiscal houses in order while they still can.

The fund, whose annual meetings begin there on Monday, has already pointed to some of the themes it hopes to press home with a barrage of projections and studies on the global economy in coming days.

The IMF’s Fiscal Monitor on Wednesday will feature a warning that public debt levels are set to reach US$100 trillion this year, driven by China and the US. Managing Director Kristalina Georgieva, in a speech on Thursday, stressed how that mountain of borrowing is weighing on the world.

“Our forecasts point to an unforgiving combination of low growth and high debt – a difficult future,” she said. “Governments must work to reduce debt and rebuild buffers for the next shock – which will surely come, and maybe sooner than we expect.”

Britain’s Chancellor of the Exchequer Rachel Reeves has already faced an IMF warning about debt. Photo: Reuters

Some finance ministers may get further reminders even before the week is over.