IMF warns global public debt is nearing WWII-era highs as cheap borrowing fades

The International Monetary Fund has released new figures showing global public debt reached 93.9% of GDP in 2025 and is projected to top 100% by 2028—a level rarely seen outside World War II. The IMF says the sharp rise in borrowing costs has ended the ability of governments to postpone difficult budget decisions. Net interest burdens have increased rapidly. In the United States, net interest payments rose from 2% of GDP before the pandemic to 4.2% in 2025, exceeding defense spending. IMF Fiscal Affairs officials Era Dabla-Norris and Rodrigo Valdes said policymakers can no longer rely on easy financing to avoid tough fiscal trade-offs. Pressure is most acute in low-income economies, where interest costs now absorb an average of 21% of tax revenue. The IMF warned that persistent deficits increasingly channel national income to creditors at the expense of public services, leaving future generations to shoulder the costs. The report also points to a widening trust and understanding gap. Only 42% of survey respondents recognized that higher taxes or lower spending would reduce a deficit—a weakness the IMF says must be addressed for any credible reform agenda.