Global public debt is on track to hit roughly 100% of world GDP by 2029. That’s a number the world hasn’t seen since the aftermath of World War II. The International Monetary Fund is sounding the alarm, urging governments to rein in deficits, build fiscal buffers, and align their debt management strategies with monetary policy.
The IMF has specifically flagged a potential “doom loop”: high debt forces governments to pay more interest, which means larger deficits, which means more debt, which means even higher interest payments. The US and China are the two largest contributors to this ballooning figure. Interest payments on sovereign debt are projected to rise significantly across several economies.
The drivers behind this trajectory include escalating defense spending, aging populations putting pressure on pension and healthcare systems, and demographic pressures.
Japan gets a personalized wake-up call
While the IMF’s guidance applies broadly, Japan received tailored advice in February 2026. The fund urged Tokyo to continue raising interest rates and explicitly warned against cutting consumption taxes, a move that would further erode Japan’s already thin fiscal cushion. Japan has carried debt levels well above 200% of its own GDP for years. As interest rates rise globally and Japan’s central bank edges away from its ultra-loose monetary policy, the cost of servicing that mountain of obligations is climbing fast.
