Global Debt Alarm Bells Ring as Total Surges to Rp 5.5 Quadrillion

Total global debt has surged to a record high of US$348 trillion (Rp 5.501 quadrillion) at the end of 2025, according to the Institute of International Finance (IIF) Global Debt Monitor report. This represents an addition of nearly US$29 trillion (Rp 458.375 quadrillion) over the year, marking the fastest accumulation on record.

The rapid increase has been driven primarily by the government sector, which contributed more than US$10 trillion (Rp 158.061 quadrillion) of the total rise. The United States, China, and the Eurozone are responsible for approximately three-quarters of the public debt surge.

The IIF warns that “a strong mix of fiscal expansion, accommodative monetary policy, and lighter regulatory streamlining could drive further debt accumulation, whilst raising concerns about rising leverage and overheating in some market segments.”

The current global debt cycle is no longer driven by households or corporations, but rather by persistent fiscal deficits in major economies. Whilst the nominal debt amount has increased, the global debt-to-GDP ratio has declined slightly to approximately 308 per cent in 2025, driven by advances in developed nations. However, the debt-to-GDP ratio in emerging markets has continued to rise, reaching a record above 235 per cent of GDP.

Global government debt has reached approximately US$106.7 trillion (Rp 1.686521 quadrillion) by year-end, rising significantly from US$96.3 trillion (Rp 1.522115 quadrillion) at the end of 2024. Non-financial corporate debt stands at roughly US$100.6 trillion (Rp 1.590111 quadrillion), while household liabilities have increased more moderately to US$64.6 trillion (Rp 1.021096 quadrillion).

The IIF notes that “looser financial conditions should support efforts to mobilise much-needed capital for national priorities, including defence financing. A fresh wave of global capital expenditure supercycle will strengthen this momentum, with large-scale investments in artificial intelligence data centres, security and energy transition, and resilient infrastructure emerging as key growth drivers for the global debt market.”

The structural shift in debt composition reveals that the public sector is increasingly dominating global balance sheets, making economic stability more vulnerable to changes in interest rates and investor confidence. January was one of the busiest periods for global government bond issuance, as many countries rushed to fund budget requirements amid strong investor demand.

Whilst global economic growth is projected to remain stable at 3.3 per cent in 2026 according to the International Monetary Fund (IMF), this rate is considered insufficient to offset the mounting debt pile. Should borrowing continue at 2025 rates, the debt-to-GDP ratio risks surging again, particularly in emerging markets facing severe refinancing burdens.

The IIF estimates that emerging markets face debt maturities exceeding US$9 trillion (Rp 142.254 quadrillion) in 2026, whilst developed markets face over US$20 trillion (Rp 316.121 quadrillion) in maturing bonds and loans. The combination of high public borrowing and substantial rollover requirements suggests that global debt levels are likely to remain near historic records.

“Strong risk appetite has supported high-yield bond issuance, leveraged lending, and IPO markets. However, future fiscal policy choices will be the primary determinant of the direction of global financial balance sheets, particularly if companies continue to fund their capital expenditure through bond markets amid persistent government budget deficits,” the IIF added.