WASHINGTON — Global debt remained at record levels as governments faced mounting fiscal pressures from higher borrowing costs, increased public spending and persistent geopolitical uncertainty, according to recent assessments by the International Monetary Fund (IMF) and the Institute of International Finance (IIF) released ahead of June 26.
The IIF said global debt climbed to a record level during the first quarter of 2026, reaching nearly $353 trillion after rising by more than $4 trillion from the previous quarter. The industry group said government borrowing accounted for much of the increase, with the United States and China contributing significantly to the overall rise. The organization said geopolitical tensions, investment in artificial intelligence infrastructure and energy security initiatives could continue to support elevated borrowing.
Separately, the IMF warned in its April Fiscal Monitor that global public debt had risen to nearly 94% of world gross domestic product in 2025 and, under current policies, was projected to reach about 100% of global output by 2029. The fund said public finances were under pressure from higher interest payments, demographic spending, defense expenditures and broader fiscal demands.
“Credible, well-sequenced fiscal adjustment is urgently needed across all country groups,” the IMF said in the report.
The IMF said higher financing costs and growing market sensitivity to fiscal developments had reduced governments' room to respond to future economic shocks. It also noted that lower-income countries continued to face significant challenges as debt-servicing costs consumed a larger share of government revenues while access to external financing remained constrained.
The IIF said sovereign debt issuance remained strong despite higher interest rates, supported by investor demand. It added that emerging markets faced substantial refinancing needs over the coming years, while advanced economies continued to rely on debt markets to finance persistent budget deficits.
International financial institutions have urged governments to balance support for economic growth with efforts to place public finances on a more sustainable path. The IMF said fiscal strategies would need to reflect country-specific circumstances while maintaining investor confidence and protecting vulnerable populations.
As of Thursday, neither the IMF nor the IIF had announced revisions to their latest debt outlooks. Officials from both organizations continued to monitor fiscal conditions, borrowing trends and financial market developments amid ongoing economic uncertainty.
