Global debt tops $365 trillion after $10 trillion rise, IIF warns

Global debt rose by $10 trillion (€8.5 trillion) in the first half of 2026 and has now topped $365 trillion (€310 trillion), the Institute of International Finance (IIF) reported, warning that rising debt-service costs present a serious risk for many governments.

Government borrowing has increased at a time when yields on medium- and long-term government bonds in some of the world’s largest economies have reached their highest levels in more than a decade. The trend is hitting the United States, Japan, France and the United Kingdom; higher yields reflect investors' worries about elevated interest rates, prolonged high energy costs, sluggish growth and large public spending.

The IIF singled out four large economies, saying they face "persistent high deficits and rising interest costs" — problems traditionally linked to heavily indebted emerging markets. The report stresses that rising borrowing needs and greater interest bills are spreading beyond typical high-debt countries.

Last year, developed economies paid more than $3.3 trillion (€2.8 trillion) in interest on internationally traded government bonds — a sum larger than global spending on artificial intelligence (€2.2 trillion), defence (€2.6 trillion) and clean energy (€2 trillion). The IIF warned debt has turned into a political issue, creating a "vicious circle between elections and short-term, quick fixes," while increasing long-term vulnerability as the benefits of further borrowing diminish.

"As reference interest rates rise, a sharp increase in interest costs is expected, while the structural pressures arising from health and public-pension costs largely remain unresolved," the IIF said.

Calls for fiscal reform

The Organisation for Economic Co-operation and Development (OECD), based in Paris, said in its provisional economic report published on Wednesday that rising bond yields point to the need for stronger efforts to rein in and reallocate government spending, improve public-sector efficiency and boost revenues. Economists and policymakers face a trade-off: pursue fiscal consolidation to stabilise debt-servicing burdens or risk higher borrowing costs and weaker growth over the medium term.

With interest burdens already at record levels, the IIF and OECD both argue the window for gradual, well-designed reforms is narrowing. That raises policy questions for advanced economies on how to combine spending restraint, targeted investments and revenue measures without undermining growth.

Photo: press material from the event