Global public debt levels will top 100 per cent of GDP before the end of the decade \u2014 the highest in the post-war era, the International Monetary Fund has warned.<\/p>\n
The Washington-based fund rang the alarm on rising debt burdens in advanced and emerging economies, calling on governments to limit spending in line with tax revenues, manage public sector wage bills and build up fiscal buffers.<\/p>\n
Global public debt is on course to exceed 100 per cent of GDP by 2029, according to the IMF\u2019s projections, the highest level since 1948. There is a 5 per cent chance that global debt could top 120 per cent of GDP over the next four years. \u201cThe distribution of risks is wide and tilted toward debt accumulating even faster,\u201d the IMF said in its bi-annual fiscal monitor. <\/p>\n
\u2022 Reeves faces a historic challenge with record state spending<\/a><\/p>\n The UK is one of the countries<\/a> whose debt burden is on course to grow, from about 103 per cent of GDP to 105 per cent by the end of the decade. US gross public debt will jump from around 125 per cent this year to 143 per cent by 2030, according to the projections. <\/p>\n The debt ratio measures outstanding debt in relation to the size of an economy. Debt burdens can be reduced through cutting back on borrowing or growing an economy and boosting the measure of GDP.<\/p>\n \u201cThe persistence of spending above tax revenues will push debt to ever higher heights threatening sustainability and financial stability\u201d, the fund said. \u201cPrioritising fiscal policy is essential to support debt sustainability and prepare fiscal buffers to use in case of severe adverse shocks including financial crises. But while we do recognise that the fiscal equation is very hard to square politically, the time to prepare is now.\u201d<\/p>\n The warning comes as Rachel Reeves, the chancellor<\/a>, arrived in Washington for the IMF and World Bank\u2019s annual meetings ahead of her budget in November. The chancellor has just \u00a39.9 billion in breathing room to meet her main fiscal rule \u2014 one of the lowest levels on record for any chancellor since 2010. <\/p>\n \u2022 IMF bows to Trump on trade surpluses, but is China listening?<\/a><\/p>\n