Washington: The International Monetary Fund (IMF) has raised alarms that global public debt is projected to surpass 100 percent of GDP by 2029, reaching a level not observed since the aftermath of World War II.
According to Palestine News and Information Agency - WAFA, Rodrigo Vald©s, the newly appointed Director of the IMF's Fiscal Affairs Department, shared this projection during a press briefing in Washington. The briefing was held on the sidelines of the third day of the Spring Meetings of the IMF and World Bank. Vald©s indicated that global public debt stood at approximately 94 percent of global GDP in 2025. This implies that the total debt owed by the world's governments is set to equal the value of all goods and services produced globally within a year, raising concerns about the ability of countries to service their debt without hindering economic growth.
Vald©s highlighted that the ongoing conflict in Iran has emerged as a new source of fiscal pressure in an already strained global landscape. The conflict has disrupted energy supplies and tightened financial conditions globally. Vald©s noted that this situation forces governments to make challenging policy decisions between shielding populations from rising prices and maintaining fiscal stability.
He emphasized that the conflict in Iran is leading to negative fiscal outcomes, including higher commodity prices, rising global interest rates, a stronger US dollar, and energy price spikes. These factors are exacerbating macroeconomic pressures, particularly in emerging market and developing economies.
Vald©s called for the gradual elimination of government fuel subsidies, which are a drain on public finances. He also urged countries to broaden their tax bases as part of medium-term fiscal plans. Despite the global economy's resilience, he noted that the fiscal position has deteriorated.
The ongoing Israeli-American war on Iran has contributed to significant volatility in global markets, with the conflict leading to higher oil prices and increased inflation levels.