Governments and companies borrowed USD 25 trillion from markets in 2024, which is USD 10 trillion more compared to the pre-COVID period, and triple the amount raised in 2007, according to a new OECD report.
The OECD Global Debt Report 2025: Financing Growth in a Challenging Debt Market Environment shows that debt levels are expected to rise further in 2025, with the aggregate central government marketable debt-to-GDP ratio in OECD countries reaching 85%, more than 10 percentage points higher than in 2019 and nearly double the 2007 level.
Bond yields in several key markets rose despite policy rates falling, while both sovereign and corporate indebtedness increased. This combination of higher costs and higher debt risks restricting capacity for future borrowing at a time of significant investment needs. Past borrowing, a legacy of the 2008 financial crisis and COVID-19 pandemic, has been used primarily to cushion the impact of shocks and facilitate recovery. Now, significant new investment will be needed to advance medium- and long-term policy goals, including to boost growth and productivity, respond to population ageing and address defence needs.
"Sovereign and corporate debt levels continue to grow across the world, at a time of increasing borrowing costs and market volatility," OECD Secretary-General Mathias Cormann said. "Increasing the efficiency of public spending, prioritising government borrowing for productivity enhancing public investment that enhances long-term growth and providing firms with incentives to ensure their borrowing enhances their productive capacity, will contribute to improving debt prospects."
Sovereign bond issuance in OECD countries is projected to reach a record USD 17 trillion in 2025, up from USD 14 trillion in 2023. Outstanding debt is projected to rise from USD 54 trillion in 2023 to almost 59 trillion in 2025.
In emerging markets and developing economies, sovereign borrowing from debt markets has also grown significantly, from around USD 1 trillion in 2007 to over USD 3 trillion in 2024, with issuance increasing by 12% in 2024. China accounted for 45% of total issuance in 2024, up from around 17% in 2007-14.
The outstanding global stock of corporate bond debt reached USD 35 trillion at the end of 2024, resuming a long-term trend of over two decades of consecutive increases in borrowing that came to a temporary halt in 2022. This long-term growth has largely been driven by increased issuance by non-financial issuers, whose debt has nearly doubled since 2008.
Higher borrowing costs are starting to be felt. Government interest payments increased as a share of GDP in about two-thirds of OECD countries in 2024, reaching 3.3%, an increase of 0.3 percentage points compared to 2023. This means spending on interest payments is greater than government expenditure on defence in the OECD on aggregate. It also raises refinancing risks for both sovereign and corporate issuers, with nearly 45% of sovereign debt in OECD countries set to mature by 2027. Roughly one-third of all outstanding corporate bond debt is also set to mature in the next three years.
Most corporate debt in recent years has been used to fund financial operations like refinancings and shareholder payouts and there has not been an associated increase in corporate investments to help boost productivity.
The withdrawal of central banks from sovereign debt markets continued in 2024. In OECD economies, central bank holdings of domestic sovereign bonds continuously fell from 29% of total outstanding debt in 2021 to 19% in 2024, while domestic households' share grew from 5% to 11%, and that of foreign investors from 29% to 34%. If current levels of debt are to be maintained, either existing investors will need to buy more debt, or new, likely more price-sensitive, investors will need to enter the market, which could increase volatility.
A thematic chapter of this year's report assesses the financing needs to achieve global climate change objectives. Continuing at recent growth rates in public and private climate transition investment, advanced economies would not be aligned with the Paris Agreement goals until 2041. The situation is particularly challenging for most emerging markets, which would not meet the Paris Agreement goals by 2050 at current growth rates.
Greater levels of public sector financing would add significantly to public debt-to-GDP ratios over coming decades, while more reliance on the private sector would require rapid development of capital markets and high levels of growth in debt issuance. Financial regulation reforms will be essential to unlock debt markets' potential to finance the climate transition, particularly to enhance capital market development in emerging markets, according to the report.
