Global Debt Surpasses $365 Trillion Amid Soaring Borrowing Costs
Global debt crossed $365 trillion after rising $10 trillion in the first half of the year, driven by soaring borrowing costs and large government deficits across major economies, according to the Institute of International Finance.
Global debt has continued to surge, increasing by $10 trillion in the first half of the year and crossing the $365 trillion threshold for the first time. According to a study published by the Institute of International Finance (IIF), governments worldwide are facing mounting pressure and significantly higher borrowing costs.
Rising Yields and Fiscal Strain
Yields on medium and long-term government bonds in the United States, Japan, France, and the United Kingdom have reached their highest levels in over a decade. This upward trend reflects investor anxieties regarding persistent inflation, high energy prices, moderate economic growth, and substantial government spending. The IIF specifically highlights major economies, warning that they are dealing with persistently large deficits and soaring interest expenses—challenges traditionally associated with developing nations facing debt distress.
"Developed nations paid more than $3.3 trillion in interest last year on government bonds traded in international markets," according to the IIF study.
To contextualize this financial burden, global interest payments surpassed total worldwide spending on artificial intelligence, which reached $2.6 trillion, global defense expenditures at $3.1 trillion, and investments in clean energy totaling $2.3 trillion.
Political Pressures and International Warnings
The IIF warns that sovereign debt has transformed into a critical political issue, creating a vicious cycle between election cycles and short-term fixes, while long-term vulnerabilities accumulate.
In parallel, the OECD warned that rising bond yields underscore the urgent need to curb and redirect government spending, enhance public sector efficiency, and bolster revenues to ensure long-term debt sustainability.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva emphasized that global economic shocks drive debt levels upward like a staircase rather than a pathway to prosperity. She urged governments to prioritize fiscal consolidation alongside price stability, acknowledging that these necessary policy steps remain politically difficult.
