Economists typically track a narrower slice of that total—debt held by the public, which excludes what one part of the government owes another. In the U.S. that figure reached 99.4 percent of GDP in 2025 and this year is expected to overtake GDP for the first time since 1946 (setting aside COVID years), meaning America would owe more than the total value of all goods and services it produces in a year. The CBO projects that the debt-to-GDP ratio will hit 107.7 percent in 2030 and 175.1 percent by 2056.
And all debts come with interest. In fiscal year 2025, for the first time ever, the federal government paid more than $1 trillion to service its debt, at an average rate of 3.36 percent. That accounted for 13.9 percent of all federal spending. That’s more than the $893 billion Congress allocated for discretionary defense spending that year and close to the amount approved for Medicare, which had a $988 billion budget. The CBO projects that interest payments will comprise 4.6 percent of GDP by 2036—an increase of nearly 40 percent in a decade—and as the share of federal spending reserved for interest payments grows, it will crowd out other areas of public spending.
The global debt-to-GDP ratio increased by nearly 2 percentage points between 2024 and 2025, up to 93.9 percent, according to the new IMF report. By 2029, the IMF expects that the global debt-to-GDP ratio will cross the 100 percent threshold, which has not happened since 1946.
The IMF said the increase is “driven largely by the world’s major economies,” which increasingly cannot afford both rising interest repayments and popular public programs—such as entitlements (like Social Security and Medicare) and defense spending. So, they borrow more.
This, the IMF emphasized, is unsustainable. “Credible, well-sequenced fiscal adjustment is urgently needed across all country groups,” the authors of the IMF report wrote.
- In the U.K., the government’s accumulated debt is 93.1 percent of GDP, according to a March report from the country’s Office for National Statistics (ONS). Last year, the U.K. spent 111.2 billion pounds ($150 billion) on debt payments in fiscal year 2025-26, accounting for 8.3 percent of total British government spending.
- France is dealing with an even worse debt-to-GDP ratio of 118 percent. Paris has burned through five prime ministers in less than two years as successive governments have tried—and failed—to pass budgets that would rein in spending. Debt-servicing costs alone are expected to hit 59.3 billion euro ($67 billion) in 2026, up from 36.2 billion ($43 billion) in 2020.
- According to a report from the Brazilian central bank released on March 31, the country’s total government debt was 79.2 percent of GDP as of February, and the IMF projects Brazil’s gross public debt will hit 99 percent of GDP by 2030, up from 62 percent in 2010. Brazil’s nominal deficit runs to 8.1 percent of GDP, with interest payments alone accounting for roughly 7 percentage points.
- Japan’s gross government debt is roughly 235 percent of GDP—the highest in the developed world—and in April Tokyo enacted the largest budget in its history, totaling 122.3 trillion yen (more than $750 billion), under Prime Minister Sanae Takaichi’s expansionary fiscal agenda. For decades, Japan borrowed at near-zero rates, but a March 2024 change in monetary policy has led to 10-year government bond yields climbing above 2.3 percent in January, the highest since 1999, with 40-year yields hitting a record 4.2 percent.
- China’s headline general government debt is around 88 percent of GDP, but the IMF’s broader augmented measure, which accounts for local-government financing vehicles and other off-book liabilities, puts the figure above 120 percent and climbing.
Meanwhile, a cluster of smaller, fiscally disciplined countries has kept debt well under control. Estonia and Bulgaria sit under 30 percent of GDP; Switzerland is at around 37 percent (helped by a constitutional “debt brake,” approved by 85 percent of Swiss voters in 2001); and the Nordic nations—namely, Sweden, Denmark, and Norway—are all under 55 percent. These are small, open economies with strong export bases, and—in the case of Sweden and Ireland—have endured acute fiscal crises and built durable fiscal institutions in response. Though Nordic countries have generous welfare systems, Sweden and Denmark finance theirs through high tax bases rather than borrowing, while Norway pre-funds its welfare system through commodity revenues.
“If you don’t do anything about [debt], it gradually leads to a crisis,” University of Cambridge economics professor Jagjit Chadha told TMD. He compared the mounting debt problem to a ship heading in a perilous direction, set on that course by the 2008 financial crisis, the COVID-19 pandemic, and—in the U.K.’s case—Brexit. Each of those events triggered a surge of spending across developed economies.
“It’s very hard to change tack,“ he emphasized. “It’s very hard to say to people now, ‘The state will stop bailing you out.’”
The U.S. does have one competitive advantage: The dollar serves as the world’s reserve currency, which lets the federal government borrow in its own currency and shields Americans from exchange-rate risk. Other countries are not as fortunate.
A country can issue dollar-denominated debt, but if its currency weakens against the dollar before the loan comes due, the government ends up paying back significantly more than it borrowed—in its own currency’s terms—to settle the same dollar debt.
This dynamic can spur a financial crisis, Peterson Institute for International Economics Senior Fellow Monica de Bolle said. She pointed to Argentina’s 2001 crash: The country “didn’t have any other means by which to pay their debt, because the debt was denominated in a currency they don’t control [the U.S. dollar].” Without a reliable flow of dollars, countries can slide from liquidity problems into solvency ones, especially if their currency keeps depreciating.
The mounting debt is already straining the U.S. economy, even without triggering a recession. “When you see long-term sluggish economic growth, stubbornly high interest rates, and inflation above the Federal Reserve target, much of that is the result of the debt,” Jessica Riedl, a budget and tax fellow at the Brookings Institution and a Dispatch contributing writer, told TMD. “Just because we’re not having a cataclysmic debt crisis yet doesn’t mean that the debt is not eating away at our standard of living, our income, and raising our interest rates and inflation—that’s happening right now.”
The CBO’s February report projected that real GDP growth, which accounts for inflation, will be 2.2 percent in 2026—a 0.3 percentage point uptick from 2025. Inflation rose to 3.3 percent year-over-year in March, an increase of 0.9 percentage points from March 2025, and nearly four times the 0.9 percent inflation in March 2016. Meanwhile, the 10-year Treasury yield averaged 4.3 percent in 2025, the highest annual figure since 2007.
“The search for easy solutions invariably comes up empty, and we’re left with the reality that it’s going to take painful policy consolidations in order to fix the debt,” Riedl said, having calculated that seizing the entire wealth of America’s billionaire class—bank accounts and all other assets—would fund the federal government for just nine months.
Chadha agreed. “You need to have the courage to rein back on expenditures where you can, to increase some taxes where you can, and convince the financial markets you’ve got the fiscal position under control,” he explained, emphasizing that “maintaining your house is a lot easier than waiting for it to fall down.”
Often-used talking points, Riedl said, don’t add up: “We can tax the rich, we can cut the defense, we should eliminate waste, but, ultimately, you’re not fixing the federal budget until you address the big drivers of Social Security, and probably raise middle-class taxes too.”
