Global debt is on a path to top total world GDP by the end of the decade, the IMF announced in the Fiscal Monitor Report released Wednesday (October 23) in Washington, DC.

“Deficits are high, and global public debt is very high, rising, and risky. Global public debt is projected to go above $100 trillion this year. At the current pace, the global debt to GDP ratio will approach 100% by the end of the decade, rising above the pandemic peak,” said IMF Director of Fiscal Affairs Department Vitor Gaspar. 

The IMF sees the global economy growing, with 3.2% growth predicted, but that should be a cushion period for governments to make spending adjustments to bring down deficits and debt. 

“Additional efforts are necessary. Delaying adjustment is costly and risky. Kicking the can down the road won’t do. Time to act is now. The likelihood of soft landing as increased, monetary policy as already started to ease in major economies. Unemployment is low in many countries, and therefore, given this circumstance, as most economies are well positioned to deal with fiscal adjustment. But it does matter how it’s done,” said Gaspar to reporters gathered for the Annual Meetings of the IMF and World Bank this week. 

“What’s the bottom line? Public debt is very high, rising, and risky. The time is now to pivot towards a gradual, sustained and people focus fiscal adjustment,” Gaspar concluded. 

But policy makers should look for smart ways to trim budgets, and ones that maintain equitable and fair revenue from taxes, while maintaining important investments in people, technology and infrastructure that support growth. 

“So, as we’ve said more generally, the design of fiscal adjustment is what really matters. And there’s a right way to do it. And there’s many wrong ways, to do it. In the fiscal Monitor, we illustrate how countries can undertake, fiscal adjustment in a way, that’s what we call people-focused. And by that, I mean we want to trade off the negative impacts of the adjustment on growth and on inequality,” explained Era Dabla-Norris, Deputy Director of Fiscal Affairs Department.

A full copy of the report can be found at: Fiscal Monitor