The International Monetary Fund (IMF) has called on governments worldwide to strengthen debt transparency to restore investor confidence and reduce borrowing costs. The warning comes amid rising global debt levels and increased use of opaque financial instruments, which the IMF says are heightening the risk of debt crises.
According to Yan Liu, IMF Deputy General Counsel, public debt is projected to approach 100% of global GDP by the end of the decade, surpassing pandemic-era levels. Mounting debt servicing obligations and shrinking fiscal space—especially in emerging markets and developing economies—are limiting resources for social spending and infrastructure investment.
Liu highlighted that many governments are relying on complex financing structures, such as securitised, collateralised, and guaranteed contracts involving state-owned enterprises and public-private partnerships. These liabilities often remain off the books until debt restructuring occurs, eroding confidence in government data and administrative capacity. “Hidden debt can significantly increase borrowing costs and, in severe cases, threaten debt sustainability,” Liu warned.
A recent IMF review of debt-related laws in 85 countries revealed that fewer than half mandate statutory reporting of debt and fiscal operations. Many jurisdictions also exclude obligations of state-owned entities and sub-national governments from official debt definitions, enabling off-balance-sheet accumulation. The IMF urged governments to adopt and enforce laws that clearly define public debt, specify borrowing authority, and require full disclosure of all obligations, while empowering audit institutions to oversee debt operations.
The IMF emphasized that debt transparency is critical for financial stability and investor trust. Beyond legal frameworks, the Fund advocates for robust institutional mechanisms to enforce disclosure requirements. “You can’t manage what you can’t see,” Liu noted, adding that debt disclosure should be treated as a public good that strengthens resilience and lowers financing costs. The IMF continues to provide technical assistance, legal assessments, and policy support to help countries implement these reforms.
Source: Punch