MercoPress. South Atlantic News Agency

Global public debt nearing historic high, IMF finds

By 2029, the IMF foresees the highest indebtedness level since 1948

The International Monetary Fund (IMF) Fiscal Monitor report warned that global public debt was nearing a historic high, projected to exceed 100% of Gross Domestic Product (GDP) by 2029. In Latin America, the report identified Brazil, Argentina, and Uruguay as the countries with the highest levels of debt.

The highest indebtedness level since 1948 is driven by persistent fiscal imbalances and tightening financial conditions, according to the IMF forecast. The projected increase is “higher and more pronounced than projected before the pandemic.”

Brazil is riddled with high public spending, social pressures, and structural fiscal challenges, despite being the region's largest economy. Argentina is caught in a cycle of debt/deficit, chronic inflation, and political instability, and Uruguay maintains fiscal discipline without compromising economic growth; hence, debt is mostly local currency, limiting refinancing.

Overall, public debt remained a major regional risk, the IMF insisted, highlighting the shared challenge for these countries to sustain economic growth without losing fiscal control.

The IMF also raised its 2025 global growth forecast to 3.2% from the 3% projected in July. Latin America and the Caribbean are also expected to grow 2.4% in 2025, unchanged from last year.

Despite financial difficulties, Argentina is expected to be a regional highlight, with projected growth of 4.5% in 2025 (up from a -1.3% contraction in 2024). However, the IMF called for greater efforts in accumulating reserves and accelerating labor and tax reforms.

Additionally, Brazil's growth forecast for 2025 is 2.4%, a slowdown from 3.4% in 2024. “External conditions are becoming more challenging and, in some cases, domestic momentum is slowing. For example, in Brazil, signs of moderation are emerging amid tight monetary and fiscal policies,” the IMF's report noted.

For the United States, the IMF foresees a 2% growth in 2025 and 2.1% in 2026. Fears of major global uncertainty due to the tariffs announced by Republican Donald Trump at the beginning of his presidency have dissipated, although not completely.

“The impact on growth due to the trade shock is modest so far,” IMF Chief Economist Pierre-Olivier Gourinchas explained.

Colombia will grow 2.5%, Chile 2.5%, and Peru 2.9%; Ecuador will grow 3.2%, Bolivia 0.6%, Uruguay 2.5%, Paraguay 4.2%, and Venezuela 0.5%, the IMF foresaw.