The US regime’s net interest payments on federal debt are projected to reach $1.1 trillion in fiscal 2026, exceeding defense spending by $225 billion, as global sovereign borrowing climbs to record levels, according to the International Monetary Fund’s October 2026 World Economic Outlook. The report also warns that in 20 countries, government debt is expected to surpass 100% of GDP in 2026, a threshold that puts budgets, bond markets and public services under sustained pressure. The figures cover general government gross debt across all levels of authority, making them a broad measure of liabilities rather than a narrow central-government tally.
Key Takeaways: The US regime is forecast to carry $41.4 trillion in debt, roughly one-third of the global total, while its debt-to-GDP ratio rises from 107.5% in 2016 to 126.8% in 2026. China’s debt is projected at $22.5 trillion and is expected to exceed 100% of GDP for the first time. Interest costs, not just headline borrowing, are becoming the central fiscal vulnerability for advanced and emerging economies alike.
The IMF data arrive after more than a decade in which low interest rates encouraged governments to borrow heavily for infrastructure, social spending and crisis support. The shift to higher rates has made that stock of debt far more expensive to service. In the US, the regime’s interest bill now competes directly with defense and domestic priorities, a politically sensitive trade-off that is likely to shape budget negotiations. The report’s authors stress that debt sustainability depends not only on the absolute size of liabilities but also on economic growth, revenue capacity and the credibility of fiscal rules.
China’s position illustrates a different model of fiscal stress. Its projected $22.5 trillion debt burden reflects years of local-government borrowing for infrastructure and regional development, often backed by land-sale revenues. A prolonged property downturn has weakened that financing model, forcing authorities in Beijing to manage refinancing risks while trying to support growth. Unlike the US case, where federal interest costs are the immediate concern, China’s challenge is concentrated in local balance sheets and the property sector’s spillovers into public finance.
The broader lesson is that the largest absolute debtors are not always the most exposed. When debt is measured against the size of an economy, 20 countries are expected to cross the 100% threshold in 2026, including large industrialized economies and smaller developing markets. For investors, the report signals a more selective approach to sovereign risk; for governments, it points to difficult choices over taxes, spending and borrowing. The IMF’s projections are likely to feed into debates over budget plans, bond issuance and fiscal credibility in the run-up to 2026.
Source: kun.uz