Global Government Debt Expected to Surpass $92 Trillion by End of 2021

Government debt around the world spiked by $24 trillion in 2020 as a result of the coronavirus pandemic, the Institute of International Finance (IIF) said Wednesday.

The Washington, D.C.–based trade group estimated that the total amount of global debt reached $281 trillion by the end of 2020, marking a new record for global debt and exceeding the institute's earlier estimation for debt accumulated in 2020 by about $4 trillion.

The trade group credited the surge in debt directly to governments around the world that increased spending in order to respond to the virus.

"Pandemic response helped add $24 trillion to the global debt mountain in 2020, bringing it to a new high of $281 trillion," the IIF said in its report.

Last year's spending means governments around the world accumulated more debt while responding to the pandemic than they did during the Great Recession, according to MarketWatch. While the global debt to gross domestic product ratio increased by about 10 percent amid the Great Recession in 2008 and another 15 percent in 2009, the ratio jumped by an estimated 35 percent last year, according to Reuters.

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Global government debt increased by about $24 trillion in 2020, according to a report from the Institute of International Finance. In this photo illustration, Dutch silver coins and Euro notes are arranged on February 1 in Katwijk, Netherlands. Yuriko Nakao/Getty

With the pandemic still ongoing, the IIF said in its report that 2021 is likely to see a continuation of last year's global debt increases.

"While some pandemic-related fiscal measures will likely expire in 2021, budget deficits are set to remain well above pre-pandemic levels," the IIF report said. "We expect global government debt to increase by another $10 trillion this year and surpass $92 trillion by end-2021."

The report went on to say that maintaining budget deficits was necessary for countries struggling to control the pandemic but said finding "the right exit strategy" may be trickier now than it was following the Great Recession.

"Political and social pressure could limit governments' efforts to reduce deficits and debt, jeopardizing their ability to cope with future crises. This could also constrain policy responses to mitigate the adverse impacts of climate change and natural capital loss," the report said.

In the U.S., the federal debt rose by more than $4 trillion before the year was over, according to the U.S. Government Accountability Office (GAO). In a report published last November, the organization said the federal debt reached $26.9 trillion by the end of September, an increase of $4.2 trillion from the federal debt recorded in 2019. Like the IIF, the GAO credited much of that debt increase to the pandemic response.

"The deficit increased primarily because of the economic disruptions caused by the COVID-19 pandemic and the additional spending by the federal government in response," the GAO wrote in its November report. "The increase in debt held by the public was greater than the deficit primarily because of increases in the government's cash balance given the uncertainty of COVID-19–related outflows."

The federal debt is expected to continue rising through 2021, according to projections released last week by the Congressional Budget Office.

Though Americans and many others around the world are beginning to receive COVID-19 vaccinations, restrictions are still in place in several countries due to concerns about the virus' spread. Government spending increased last year in part to support businesses struggling during the pandemic but also to afford heightened sanitation measures and other safety precautions deemed necessary to prevent further spread of the virus.