Global debt hits $348T in 2025 amid sovereign borrowing

Key Takeaways:

• Global debt reached $348 trillion in 2025, up $29 trillion annually.
• Sovereign leverage led gains as governments expanded deficits and refinancing-driven issuance.
• Larger debt stock became more sensitive to rate paths and rollover calendars.

Global debt reached a record $348 trillion at the end of 2025, after nearly $29 trillion was added during the year, the fastest annual increase since the pandemic, according to the Institute of International Finance. The figures point to an acceleration in borrowing just as growth cooled and funding costs stayed elevated.

Sovereign leverage was the primary driver, as governments expanded deficits and issuance to finance spending and refinance existing obligations. That shift underscores how public borrowing, not households or corporates, led the 2025 upswing.

The build-up spans both advanced and emerging economies, reflecting pandemic legacies, structural spending demands, and higher real rates. The result is a larger gross debt stock that is more sensitive to interest-rate paths and rollover calendars.

Higher debt carries immediate fiscal costs as interest expenses rise with yields. Based on data from the Organisation for Economic Co-operation and Development, servicing costs in many member countries now absorb a larger share of national income than defense spending, crowding out room for other priorities.

Debt sustainability is a function of the debt-to-GDP ratio, the interest rate–growth differential, and the primary balance. According to the International Monetary Fund, scenario analysis suggests global public debt could approach 100% of world GDP by 2029 if current patterns persist. That outlook helps explain why officials emphasize consolidation and better tax collection. “Putting our fiscal house in order,” said Vitor Gaspar, Director of Fiscal Affairs.

Trade-offs will vary. Economies with large near-term maturities, greater foreign-currency exposure, or weaker credit profiles face heightened rollover risk and sensitivity to rating actions, while stronger revenue bases can mitigate pressure.

At the time of this writing, Bitcoin is around $68,248 with 9.88% volatility and a 14‑day RSI of 42.98 (neutral). Such readings neither validate nor negate sovereign risk; they reflect shifting risk appetite alongside a larger public‑debt backdrop.

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