The International Monetary Fund has raised a serious warning about global debt levels. It notes the world is heading toward a risky financial path. Moreover, as discussed in its report published on 27 October 2025, the international financial institution said that the United States is now leading advanced economies in the fastest debt buildup worldwide.
Note that the Fiscal Monitor of the IMF revealed that the national debt of the United States could rise from 119.8 percent of GDP in 2023 to 143.4 percent of GDP by 2030. If this happens, the country could surpass Italy and Greece, two of the most indebted economies in Europe, in the overall debt-to-gross domestic product ratio within the decade.
The IMF explained that the growth in U.S. debt is driven by several factors. These include rising defense spending, expanding social programs, tax cuts, and trade deficits that reduce revenue. In addition, higher interest rates and increased borrowing during the pandemic have left lasting fiscal scars, pushing federal deficits to historically high levels.
Globally, public debt is on track to exceed 100 percent of total world gross domestic product by 2029, reaching a level unseen since 1948. The international financial institution said this steep climb reflects how governments have yet to recover from heavy borrowing during the pandemic and continue overspending without making long-term adjustments.
The report explained that higher interest rates are now making borrowing more expensive. Paying interest on existing debt already costs more than national defense budgets for many countries. This shift is squeezing the abilities of governments to fund relevant programs like healthcare, education, and public infrastructure that were once financed cheaply.
Even countries known for fiscal restraint are relaxing their limits. Germany, for example, has eased its constitutional debt brake to make room for more spending on public infrastructure. The IMF explained these decisions can be defensible temporarily, but further warned they may weaken fiscal discipline if not paired with a stringent repayment strategy.
The report also highlighted the growing impact of aging populations. By 2050, the old-age dependency ratio in the U.S. could reach 40 percent, while this could exceed 55 percent in the entire European Union. This will translate to fewer workers supporting more retirees. It will also drive up pension and healthcare costs that will strain public budgets further.
In addition, if debt continues to expand unchecked and uncontrolled, the IMF warned that a sudden loss of investor confidence could trigger commotion in global markets. Such a shock could knock various financial markets like currencies, banks, and bonds. This could also spread financial instability far beyond the borders of any single large economy.
The IMF urged governments to rebuild fiscal buffers and adopt long-term spending frameworks that encourage stability to avoid such risks. The international financial institution also emphasized the need for political courage. It argued that short-term populist policies may feel appealing now, but will make managing debt and overall finance much harder in the future.