Jakarta, CNBC Indonesia - The United States\u2019 debt, which has now\nsurpassed US$39 trillion or approximately Rp674,000 trillion\n(US$1=Rp17,280), is no longer merely a domestic issue.<\/p>\n
The International Monetary Fund (IMF) warns that the fiscal pressures\nin the US are indicative of problems faced by many other countries.<\/p>\n
The US debt has long been a subject of political debate. The issue\ntypically heats up during budget discussions or congressional meetings\nbut often subsides afterwards.<\/p>\n
However, the IMF\u2019s latest warning indicates that the problem is far\nlarger. The US is not the only country facing financial pressures. It\nserves as the clearest example of the growing debt issues spreading\nacross various parts of the world.<\/p>\n
Citing Fortune, during the launch of the IMF\u2019s biannual Fiscal\nMonitor report on Wednesday (15\/4\/2026), IMF Fiscal Department Director\nRodrigo Vald\u00e9s issued a stern warning. According to him, the global\neconomy is once again being tested by the impact of the war in the\nMiddle East, while many countries now have increasingly limited fiscal\nmanoeuvrability.<\/p>\n
Vald\u00e9s stated that public finances in many countries are becoming\nincreasingly strained. This means that governments around the world no\nlonger have many options to respond to new shocks, whether from wars,\nrising energy prices, or economic slowdowns.<\/p>\n
The IMF estimates that global public debt will reach 99% of world GDP\nby 2028. This figure means the global debt ratio is nearly equivalent to\nthe total value of the global economy.<\/p>\n
Moreover, in a heavy-pressure scenario that is still considered\npossible, the global public debt ratio could surge to 121% of world GDP\nwithin just three years.<\/p>\n
US Debt Burden Continues to Grow<\/p>\n
The US remains the primary example of increasingly complex fiscal\nproblems.<\/p>\n
The US budget deficit did dip slightly last year, from nearly 8% of\nGDP to below 7% of GDP. One reason was the additional revenue from\ntariffs flowing into the federal government\u2019s coffers.<\/p>\n
However, this improvement is deemed unsustainable.<\/p>\n
Vald\u00e9s said the IMF forecasts the US deficit to rise back to around\n7.5% of GDP and remain at that level for some time.<\/p>\n
At the same time, US debt is expected to exceed 125% of GDP this\nyear. The figure could even potentially rise to 142% of GDP by 2031.<\/p>\n
To merely stabilise the debt trajectory, rather than reduce it, the\nUS would need to implement fiscal tightening of about 4 percentage\npoints of GDP.<\/p>\n
According to Vald\u00e9s, this is not a minor adjustment. If implemented,\nit would be one of the largest peacetime fiscal tightenings in modern US\nhistory.<\/p>\n
Warning signs are also emerging in the bond market. The premium\npreviously enjoyed by US government bonds over those of other advanced\ncountries is beginning to narrow.<\/p>\n
Vald\u00e9s assesses that this condition shows the market is no longer as\ncomplacent about US debt as before. The longer reforms are delayed, the\ngreater the pressures that could emerge in the future.<\/p>\n
The IMF\u2019s message to the US Congress is firm. This problem cannot be\npostponed indefinitely.<\/p>\n
The World Also Lives Under a Debt Burden<\/p>\n
Washington\u2019s issues still appear more manageable compared to the\nglobal picture.<\/p>\n
The IMF highlights the worsening fiscal gaps, which is the distance\nbetween a country\u2019s current primary balance position and the position\nneeded to stabilise debt.<\/p>\n
This gap has now deteriorated by about 1 percentage point compared to\nfive years before the Covid-19 pandemic.<\/p>\n
Vald\u00e9s emphasised that this is not merely a cyclical economic issue.\nIn his view, it reflects policy choices, namely permanently higher\ngovernment spending and lower revenues.<\/p>\n
The debt burden is also becoming heavier because real interest rates\nare now about 6 percentage points higher than before the pandemic.<\/p>\n
In other words, every dollar of existing debt is now more expensive\nto service. The longer governments delay reforms, the heavier the\nadjustments that will have to be made in the future.<\/p>\n
Middle East War Worsens Fiscal Risks<\/p>\n
The ongoing Middle East conflict adds a new dimension to global\nfiscal risks.<\/p>\n
When energy and food prices rise, many governments are tempted to\ntake the politically easy but economically dangerous route. This\ninvolves providing broad energy subsidies or cutting fuel taxes.<\/p>\n
The IMF considers such policies not the best solution.<\/p>\n
Vald\u00e9s said that broad energy subsidies or tax cuts can distort price\nsignals, burden national budgets, be poorly targeted, and be difficult\nto reverse once implemented.<\/p>\n
The problem is that if half the world\u2019s countries protect their\nconsumers from rising energy prices, the other half must bear larger\ndemand adjustments.<\/p>\n
Vald\u00e9s warned that one country\u2019s domestic policies can affect global\nprices. Based on IMF modelling, the spillover effects from such\nsubsidies could even double the impact of price increases for countries\nnot providing subsidies.<\/p>\n
Era Dabla-Norris, who led the preparation of the IMF\u2019s Fiscal\nMonitor, said that governments\u2019 responses this time are indeed more\nrestrained than during the 2022 energy crisis.<\/p>\n
However, she reminded that fiscal space is now far more limited. If\ngovernments revert to old policies of broad subsidies, the costs could\nbe enormous.<\/p>\n
The IMF recommends that governments protect people, not prices. This\nmeans aid should be temporary and targeted to the most vulnerable\ngroups, rather than distributed evenly to everyone.<\/p>\n
AI Could Be a Saviour, But Also Brings Risks<\/p>\n
Amid the bleak figures, artificial intelligence (AI) emerges as one\nof the hopes.<\/p>\n
Dabla-Norris said<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/stern-imf-warning-global-debt-has-gone-too-far-1777092652", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }