Key Takeaways
- Global gross public debt reached 93.9% of GDP in 2025, up nearly 2pp from 2024, and crosses 100% in 2029 — a year earlier than the April 2025 Fiscal Monitor projected.
- The IMF's debt-at-risk measure — the 95th percentile of the projected debt distribution three years ahead — stands at 117.2% of GDP for 2028, up from 116.6% a year earlier.
- Interest expenditure has climbed from 2% to nearly 3% of GDP globally in four years. In the United States it reached 4.3% of GDP, 1.5pp above 2019.
- US Treasuries now yield more than hedged G10 synthetic-dollar equivalents, a declining convenience yield that the IMF says raises the global risk-free benchmark.
The baseline is the least interesting number in the report
The IMF's April 2026 Fiscal Monitor reports that global gross public debt climbed to 93.9% of GDP in 2025, an increase of nearly 2 percentage points from 2024, and projects it to rise by a further 8 points through 2031, "reaching the 100 percent threshold in 2029 ... one year before the projections in the April 2025 Fiscal Monitor." The global fiscal deficit held at 5% of GDP.
Those figures have been reported widely and they are the least useful part of the publication. A central projection of a slow-moving stock variable five years out carries almost no information for an allocator: no portfolio decision hinges on whether the 100% line is crossed in 2029 or 2031.
The number worth reading is in the risks section. The IMF's debt-at-risk measure — the 95th percentile of the projected debt distribution three years ahead — now stands at 117.2% of GDP for 2028, against 116.6% in the April 2025 edition. The Fiscal Monitor's own 2028 baseline is 98.8% of GDP — "a gap of roughly 20 percentage points between the median projection and the right tail," as the IMF puts it. The chart above sets the two side by side.
Debt reaches a portfolio through the discount rate, not through default
The failure mode of most sovereign-debt commentary is to treat the risk as binary and remote — some future crisis, some future restructuring. For holders of G7 paper that framing is close to useless. The transmission is continuous, and it runs through the price of the risk-free asset.
The Fiscal Monitor is unusually direct about the mechanism. It reports that "Treasuries now offer a higher yield than the synthetic-dollar equivalents for hedged G10 sovereign bonds" — the safe-asset spread has turned negative — and draws the conclusion plainly: "As the safety premium of US Treasuries decreases, the global risk-free benchmark effectively increases, raising financing costs worldwide."
The convenience yield on Treasuries is the discount investors have historically accepted for holding the world's safe asset. As it compresses, the risk-free rate rises for everyone — not through a credit event but through the arithmetic of every discount model that starts from a Treasury yield. It is a plausible partial explanation for why the entire rise in the 10-year yield this year came from the real leg rather than from inflation compensation.
Interest expense has become the binding constraint
Global interest expenditure has risen from 2% to nearly 3% of GDP in four years, which the IMF identifies as a key driver of the deficit itself. The United States is the extreme case: interest expenditures reached 4.3% of GDP, 0.3pp higher than the prior year and 1.5pp above the 2019 level.
On a debt stock near 100% of GDP, each 100bp rise in the average effective interest cost adds roughly 1pp of GDP to annual interest expense — and the adjustment arrives with a lag measured in years, not quarters. The IMF notes that financing costs "continue to adjust upward as governments refinance maturing long-term debt at markedly higher market rates." Much of the increase already incurred has not yet been paid.
This is also why the maturity structure matters more than the level. The Fiscal Monitor's simulations show that a portfolio tilted toward shorter maturities amplifies debt accumulation when financial conditions tighten, an effect that is "particularly pronounced at high debt levels and when rollover risk elevates short-term premiums." A sovereign that funds short to save on coupon is selling optionality it may need.
Sizing the tail rather than the midpoint
The practical translation is a scenario band. An investor holding long-duration government bonds can size the exposure against the IMF's roughly 20-point median-to-tail gap, not against the baseline alone. The relevant question for a 10% long-duration sleeve is what it does if the term premium reprices toward the tail — and the duration arithmetic from a 100bp move on a 17-year-duration long bond is roughly 17% of that sleeve, or 1.7% of the total portfolio.
What the Fiscal Monitor cannot tell you
Debt-at-risk is a fan chart, not a forecast, and its 95th percentile is estimated from a historical distribution of shocks that may not describe the next one. It also says nothing about timing: a 117.2% tail for 2028 is a statement about dispersion, not about when a repricing would occur, and sovereign debt ratios have sat at elevated levels for decades without a repricing. Japan's gross debt has exceeded 200% of GDP throughout, and the IMF's own numbers show it declining.
The convenience-yield argument would be falsified if the Treasury-versus-hedged-G10 spread turned positive again while debt ratios kept climbing. That would show the safe-asset premium is driven by something other than the fiscal path — most plausibly the depth of the Treasury market itself — and would sever the link between the debt trajectory and the global discount rate that this piece rests on. An earlier version of this analysis circulated with a "124% adverse scenario" figure; that number does not appear in the April 2026 Fiscal Monitor, and the correct debt-at-risk figure is 117.2%.
The measure to track from here
Debt levels are a slow variable and will not surprise anyone. The fast variable is the one the IMF put in Figure 1.29: the spread between US Treasuries and hedged G10 sovereigns. It updates daily, it is not a projection, and it is the point at which fiscal arithmetic becomes an asset price. Its sign — not the debt ratio's level — is what would tell an allocator that the world's safe asset has stopped being treated as one, and it is the same question that credit markets are currently answering with a shrug.
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