Baku:Rising government borrowing costs are intensifying fiscal pressures worldwide, the International Monetary Fund (IMF) warned, urging credible measures to contain deficits as global public debt is projected to exceed 100% of economic output by 2030.

According to Anadolu Agency, the IMF noted in a blog post that the average 10-year government bond yields across the Group of Seven economies increased by more than 1 percentage point between February and September, reaching their highest levels in nearly two decades.

The IMF identified several factors contributing to this situation, including the oil price shock, persistent inflation, stronger investment demand, and growth expectations linked to artificial intelligence. Additionally, high debt levels, spending pressures, and large government bond issuance expectations are pushing yields higher, potentially worsening debt dynamics globally.

The effective average interest cost of government financing is expected to rise from 2.3% in 2021 to 3.7% by 2031. In the United States, interest payments are forecast to increase from about 2.8% of GDP before the pandemic to 5.7% in 2031, aligning closely with projected Social Security spending.

For low-income countries, interest payments already consume more than 15% of tax revenues. Rising debt-servicing costs are reducing the scope for investment and social spending, while also limiting governments' ability to respond to economic downturns.

The global primary deficit, excluding interest payments, is anticipated to reach around 3.3% of GDP in 2026. To stabilize the debt ratio, it would need to be reduced to approximately 2.6%. Shorter debt maturities are also accelerating the impact of higher policy rates on government financing costs.

The IMF urged advanced economies to implement credible fiscal plans and called on emerging markets to enhance their debt management strategies, warning that delayed actions could necessitate more significant adjustments in the future.