According to the Organization for Economic Co-operation and Development (OECD), global debt, including both sovereign and corporate bonds, exceeded $100 trillion in 2024. This milestone highlights growing concerns over the sustainability of debt levels as governments and corporations continue to rely on bond markets for financing. The report, released as part of the OECD’s annual debt review, underscores the challenges associated with rising interest rates, slowing economic growth, and increasing geopolitical risks.
Escalating Debt Levels and Borrowing Trends
The OECD report reveals that the total volume of outstanding government debt surpassed $65 trillion, while corporate debt reached approximately $35 trillion. In 2024 alone, governments and corporations raised around $25 trillion through bond markets—$10 trillion more than the average annual issuance before the COVID-19 pandemic and nearly triple the levels recorded in 2007.
New government borrowing in OECD countries accounted for $15.7 trillion in 2024, while developing economies issued $2.8 trillion in sovereign bonds. Meanwhile, corporate debt issuance reached $6.1 trillion. The majority of these borrowings were concentrated in five major economies— the United States, Japan, France, Italy, and the United Kingdom—which accounted for more than 85% of the total sovereign debt issued in OECD countries. Notably, the U.S. alone was responsible for more than two-thirds of this amount.
As borrowing costs rise, many governments are facing increased fiscal pressure. In 38 OECD countries, the cost of servicing debt as a percentage of GDP rose to 3.3% in 2024, up from 2.4% in 2021. This trend highlights the growing financial burden on economies struggling to balance budgetary commitments with economic growth.
Outlook for 2025: Continued Growth in Debt Issuance
The OECD projects that borrowing will continue to rise in 2025, with record levels of sovereign bond issuance. Forecasts suggest that new government bond sales in OECD countries will reach $17 trillion next year, pushing total government debt in these economies close to $59 trillion. This ongoing reliance on debt markets raises concerns about long-term fiscal sustainability, particularly as economic growth slows and interest rates remain elevated.
Corporate Debt: A Shift Toward Financial Operations
Since 2008, corporate debt levels have nearly doubled. However, the report notes that recent increases in corporate bond issuance have not been primarily directed toward productive investments, such as capital expenditures or research and development. Instead, a significant portion of funds raised through corporate bonds has been used for financial operations, including debt refinancing and shareholder payouts. This trend suggests that existing debt is unlikely to be repaid through corporate profitability or investment-led growth, increasing risks of financial instability.
As debt burdens rise, borrowing costs are becoming more expensive. While central banks have begun to ease interest rates following aggressive hikes in 2022, the cost of debt financing remains significantly higher than pre-pandemic levels. As a result, companies and governments are increasingly shifting toward refinancing older, more expensive debt rather than taking on new debt for expansion. This dynamic suggests that global debt levels will continue to rise, with interest expenses becoming a growing concern.
Debt Repayment Challenges and Policy Recommendations
The OECD estimates that 42% of all government debt and 38% of corporate bonds will mature within the next three years. This concentration of upcoming repayments poses a major challenge, as higher refinancing costs could strain budgets and corporate balance sheets. The combination of rising debt costs and persistent economic uncertainties limits the ability of governments and businesses to finance future investments.
In response to these concerns, OECD Secretary-General Mathias Cormann has called for greater efficiency in government spending and prioritization of public borrowing for productive purposes. He emphasized the need to stimulate government-led investments that contribute to long-term economic growth. Additionally, he urged policymakers to provide incentives for corporations to use debt for expanding productive capacity rather than financial restructuring.
Conclusion: Balancing Debt Growth with Economic Stability
The rapid increase in global debt reflects both economic necessity and financial vulnerability. While borrowing has played a crucial role in supporting economies through recent crises, rising debt-servicing costs and inefficient use of borrowed funds pose long-term risks. The OECD’s findings highlight the urgent need for strategic debt management policies, focusing on sustainable borrowing practices that foster economic resilience and growth. As countries and corporations navigate a high-interest-rate environment, the challenge will be to balance debt expansion with fiscal responsibility, ensuring that future borrowing supports productivity rather than financial fragility.
