The International Monetary Fund has warned that global public debt, now approaching 100 per cent of world GDP, is above post-World War II highs and is likely to rise further.
IMF Managing Director Kristalina Georgieva raised the concern after a meeting of G20 finance ministers and central bank governors.
She said the 2026 global growth outlook had strengthened to around three per cent, partly because economies had absorbed recent energy-supply disruptions better than initially feared.
Countries had relied on oil and gas reserves, alternative energy sources and demand-management measures to cushion the shock.
Georgieva also said rapid investment in artificial intelligence and the power infrastructure needed to support it was contributing to growth, particularly in the United States and economies linked to the AI supply chain.
Despite those positives, the IMF chief warned that risks remained substantial.
She said the energy shock was not over, noting continued disruption around the Strait of Hormuz, the need to rebuild strategic reserves and rising electricity demand from AI.
Public debt was another major concern.
Georgieva said the pattern increasingly resembled a staircase in which debt rises sharply during crises but falls only slowly afterward.
She also warned that disinflation had stalled in many economies while fiscal pressures were pushing core bond yields higher.
Higher yields in advanced economies, she said, were lifting borrowing costs across global markets.
The effect was particularly difficult for emerging and low-income countries facing large refinancing needs and limited fiscal space.
Rising debt-service costs can reduce the funds available for infrastructure, healthcare and education.
Georgieva said central banks needed to remain focused on price stability while fiscal authorities developed credible medium-term consolidation plans.
She also called for structural reforms that reduced unnecessary regulation and removed domestic barriers to growth.
The IMF said international cooperation remained essential for managing debt problems, limiting spillovers and addressing global economic imbalances.
Georgieva noted that sovereign debt conditions had improved in some developing countries but said progress remained uneven.
She also pointed to weaker external financing, reductions in development assistance and lower new lending from some non-Paris Club creditors.
The Fund said stronger restructuring mechanisms, including improvements under the G20 Common Framework, would remain important for countries facing unsustainable debt.
