In its Fiscal Monitor Report released Wednesday, the International Monetary Fund said that US public debt will continue to increase in the coming years, as government borrowing continues to increase.

The IMF economists asserted the rise in debt will be necessary to fund increased spending by Washington on healthcare and social security, as well as green energy initiatives and other domestic economic initiatives.

The report noted the US debt to GDP ratio is estimated to be 122.2% in 2023, just above the 121.7% figure of last year. It is forecasted to rise higher in the coming years, to 136.2% of GDP in 2028. In 2018, the figure was 107.4%, and even at the height of the Covid pandemic, it only rose to 133.5%, according to the IMF’s report.

The agency noted that the two main drivers of the global increase in public debt are the US and China. It further warned that this rise in public debt was dangerous at this point in history, since the expanding borrowing and spending by governments could increase global inflationary pressures, counteracting the efforts of central banks to contain inflation through tightening monetary policy.

The head of the IMF’s Fiscal Affairs Department, Vitor Gaspar, said in an interview with the Financial Times, “By the end of our projection horizon – 2028 – public debt in the world is expected to reach almost 100% of GDP,” noting that this is “back to the record levels set in the year of the pandemic.”

The IMF went on to warn that the recent banking crisis, seen most acutely in the US and in Switzerland, have increased the threat of a global financial crisis, and that could place even more strain on public sector balance sheets.