Public debt : a global focus

The sharp rise in global public debt is attracting growing attention. According to the International Monetary Fund (IMF), global public debt could reach or even exceed 100% of gross domestic product (GDP) by 2030 if current trends persist. Rising interest costs, fiscal pressures and geopolitical tensions are hampering the ability of governments to invest in priorities such as social programs or the climate transition. What about Quebec and Canada?

Quebec's net debt was 38.7% of GDP at the end of the 2024-2025 fiscal year. The 2025-2026 budget forecasts a deficit of approximately 2.2% of GDP after payments from the generations fund. For the period between 2025-2026 and 2028-2029, the government expects to accumulate about 41% of GDP. At the national level, a structural increase in deficits and a growing debt service burden is also observed. In fact, in 2027-2028, federal interest costs could reach $50 billion, raising questions about long-term debt sustainability and the ability to maintain investment in health, education or the ecological transition.

This increase in debt is worrying for various reasons. First, there are the elevated macroeconomic risks through the likelihood of making projections that could underestimate real debt. Secondly, there is a restriction of flexibility in the face of shocks because a growing debt reduces the room for fiscal manoeuvre. Finally, there is the issue of an uncertain fiscal future as more countries are weakened by rising interest costs, persistent deficits and growing debt that limits their ability to invest for future investment.

As far as the issues are concerned, at the global level, there is pressure on the markets, a need for austerity. For Quebec, it is a question of debt service management, deficit control, and budget restructuring. At the Canadian level, there is a need for tax reform, a more strategic investment logic.

Global public debt is at a historically high level with little sign of slowing down in the short term. This weakens the ability of states to invest in the future. By 2030, in Quebec as in Canada, the net increase and future deficits require ambitious budgetary trade-offs. As an indication, for the period 2025-2028, Quebec's projections show an increase in net debt of approximately 42% of GDP and a rate shock could quickly increase interest costs by several billion dollars, accentuating fiscal pressures. Therefore, returning to a balanced budget within a certain period would probably seem crucial to maintain financial sustainability. In the face of this, what are the impacts on your strategic decisions?

In a context of high interest rates, there is generally limited room for manoeuvre to invest, innovate and recruit. In Quebec, for example, this rise in debt service raises questions for organizations and businesses. These include:

1. Should you revise your supply, cost or growth forecasts?

2. How will your government clients or public partners adjust their budgets?

3. What will be the most sustainable sources of financing in the medium term?

At GesFin International, we support decision-makers in the analysis of these macroeconomic variables to secure their development, debt management or investment strategies while emphasizing active monitoring, clear financial modelling and recommendations.