Public debt worldwide is projected to exceed 100% of gross domestic product by 2029, reaching its highest level since 1948 and continuing to grow, the IMF said on Wednesday, urging countries to create security reserves for protection against financial risks.

Vittor Gaspar, head of the International Monetary Fund’s fiscal affairs, said world -renowned levels could be launched at 123% of GDP by the end of the decade, according to a “unfavorable one, but likely to be”

“From our point of view, the most alarming situation would be the one in which there would be financial turmoil,” he said in an interview, referring to a separate IMF report published on Tuesday and warned of a possible “insignificant” correction of the market.

This could cause a budgetary “vicious circle”, as the one that occurred during the European public debt crisis launched in 2010, he said.

Concerns about US -China trade war

The IMF published its forecasts on global development this week in 2025, given the milder impact of duties, although it warned that renewal of trade war between the US and China could significantly slow down production.

Gaspar said the extremely uncertain prospects make budgetary reforms more important than ever and that the IMF urges both developed economies and developing countries to reduce their debt levels, limit deficits and create security reserves.

“With quite significant risks on the horizon, it is important to be prepared, and preparation requires the creation of fiscal security reserves that will allow the authorities to respond to serious negative disorders in the event of a financial crisis,” he noted.

A previous IMF survey showed that countries with a larger budgetary margin were in better position to limit damage to employment and economic activity in the event of serious negative shocks in conjunction with a financial crisis, he said.

In the latest edition of Fiscal Monitor, the IMF noted that rich economies already had public debt more than 100% of GDP or are projected to exceed that level, including the United States, Canada, China, France, Italy, Japan and Britain.

The risk they run is considered low to moderate, as these countries have developed government bond markets and more policy options, while many emerging markets and low -income countries have less resources and face higher borrowing costs, despite their relatively low rate of debt.

Borrowing is much more expensive today than the period between the world financial crisis of 2008-2009 and the pandemic launched in 2020, Gaspar said. Increased interest rates is pressure on budgets at a time when requirements are high due to geopolitical tensions, growing natural disasters, subversive technologies and aging population.

“Although we recognize that the budgetary equation is very difficult to achieve politically, the time to prepare is now,” he said, noting that targeted public spending on education and infrastructure could boost GDP.

Investment in human capital

The allocation of a very small percentage of GDP from current spending on education or other human capital investments could push GDP by more than 3% by 2050 in advanced economies and almost twice as high as emerging markets and growing economies, the IMF said.

In the US, public debt as a percentage of GDP exceeded the highest level after World War II during the Covid pandemic and is projected to exceed 140% of GDP by the end of the decade, Gaspar said.

He said IMF officials would encourage US authorities to stabilize debt by reducing the fiscal deficit during the forthcoming revision of the US economy that will begin next month.

The decline in the US deficit will help to balancing the US economy, while releasing resources for the private sector in the US and around the world, helping to reduce interest rates and making funding conditions more favorable, he said.

China’s public debt is also increasing rapidly, from 88.3% of GDP to 113% expected to reach 2029, according to the IMF, which also plans a regular revision of the Chinese economy next month.