Global debt hits record $318 trillion after $7 trillion surge in 2024

Global borrowing surged by $7 trillion in 2024, pushing total debt to a record-breaking $318 trillion, according to a report from the Institute of International Finance (IIF). This is the first time in four years that debt-to-GDP ratios have climbed, now reaching nearly 328%.

The United States, China, France, India, and Brazil were the biggest contributors, racking up massive amounts of new debt. The IIF warned that with economic growth slowing and borrowing costs still high, financial markets need to be on alert.

“The increasing scrutiny of fiscal balances—particularly in countries with highly polarized political landscapes—has been a defining feature of recent years,” said the IIF in its report.

Governments brace for bond market pressure

With debt levels this high, governments are under pressure. The IIF cautioned that investors, known as “bond vigilantes,” could start pushing up interest rates in an attempt to force countries to control their spending.

This has already happened before—market reactions to government debt levels have shaped political outcomes in multiple countries. “The increasing scrutiny of fiscal balances — particularly in countries with highly polarized political landscapes — has been a defining feature of recent years,” the IIF said.

“While market reactions to rising government debt levels in the US have been relatively muted despite its debt remaining on a ‘non-stabilization path,’ robust economic activity, productivity growth, and the safe-haven status of US Treasuries continue to mask the deepening weaknesses in U.S. fiscal balances. However, not all countries enjoy such privileges.”

But, of course, not every country has that privilege. The report pointed to the UK and France, where debt concerns have directly influenced political instability.

The UK saw the bond market turmoil help end Liz Truss’s brief tenure as Prime Minister in 2022, and in France, debt-related issues contributed to the fall of the Barnier government in 2024.

The situation in Germany is also changing a bit, with growing calls to amend the country’s “debt brake” rule, which the IIF has blamed for slowing down the country’s economy.

Despite the massive $7 trillion increase in 2024, this was still lower than the $16 trillion added in 2023. But the IIF says borrowing won’t stop anytime soon—government debt accumulation is expected to remain above $5 trillion in 2025, led by the US, China, India, France, and Brazil.

Developing markets struggle with rising debt burdens

Emerging markets are under immense pressure as their debt loads continue to grow, said the IIF. Total debt in these economies jumped by $4.5 trillion in 2024, pushing total emerging market debt to an all-time high of 245% of GDP.

The biggest issue is rising interest costs. Many of these economies now have to roll over a record $8.2 trillion in debt this year, with about 10% of it denominated in foreign currencies—a situation that could quickly turn dangerous if funding dries up.

The IIF report warned that some emerging markets are becoming less capable of managing their debt loads, with their debt-carrying capacity declining in recent years.

The difference in economic growth between underdeveloped and developed economies has become less pronounced, meaning governments now have fewer ways to manage their rising debt costs.

The countries that saw the biggest increase in debt-to-GDP ratios in 2024 were Sweden, Nigeria, China, Israel, and Saudi Arabia. Meanwhile, the biggest declines were recorded in Argentina, Türkiye, the Netherlands, Greece, and Ireland.

What makes the problem even worse is the fact that many emerging markets are not transparent about their actual debt obligations, making it harder for investors to assess risks.

The IIF emphasized that governments need to improve debt transparency to avoid liquidity crises, which could spiral into something much worse.

Geopolitics isn’t helping, either. The report pointed to rising trade tensions and the Trump administration’s decision to freeze US foreign aid, which includes cuts to USAID programs.

The IIF said these moves could create huge liquidity problems for some economies that rely on foreign assistance to help manage their debt obligations.

Looking ahead, the IIF expects global debt accumulation to slow in H1 2025, largely because of high uncertainty in global economic policy and rising borrowing costs. “With global economic policy uncertainty at record highs—exceeding levels seen at the peak of the pandemic—cautious borrowers may limit private sector demand for credit,” the report said.

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