The Institute of International Finance reported that global debt increased by $10 trillion in the first half of the year, driven by rising yields on government bonds in major economies such as the U.S., Japan, France, and the U.K. These rising yields indicate investor concerns over high interest rates, ongoing energy cost pressures, slow economic growth, and substantial fiscal spending.
The IIF noted that advanced economies collectively paid over $3.3 trillion in interest on internationally traded government bonds last year, surpassing expenditures on AI, defense, and clean energy. This growing debt issue has become politically contentious, creating a cycle of short-term fixes that exacerbate long-term vulnerabilities.
The Organisation for Economic Co-operation and Development emphasized the need for reforms to manage government spending and improve public sector efficiency to ensure debt sustainability.
Additionally, IMF chief Kristalina Georgieva highlighted the urgency of prioritizing fiscal consolidation and maintaining price stability, warning that without decisive action, debt levels will continue to escalate, posing risks to economic stability