- Debt financing costs have jumped to the highest level since 2007 among OECD governments.
- Interest payment as a share of GDP outpaced defense and safety services.
- The US accounted for over two-thirds of OECD gross borrowing in 2024.
Interest payments have taken the biggest bite out of government budgets since at least 2007, as debt financing costs outpace spending on defense, public safety, and housing in many countries.
The Organization for Economic Cooperation and Development found that debt servicing costs accounted for 3.3% of GDP across 38 member economies, a sharp increase from 2.4% in 2021.
“Bond yields in several key sovereign 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 when investment needs are greater than ever,” the…
