Gathered in Washington for the IMF’s annual meetings, finance ministers and central bankers find themselves facing a global trading system in disarray, uncertainty over the dollar’s direction, and financial markets that remain, for now, unnervingly complacent.

Amid this confusion, policymakers would do well to focus on a quieter but far more dangerous threat. After years of benign neglect, public debt has re-emerged as a serious risk.

Five years ago, the pandemic triggered an explosion in fiscal deficits. Lockdowns throttled economic activity and tax revenues, while public spending soared as governments rushed to protect the vulnerable. Global deficits ballooned from 3.5 per cent of output before the crisis to 9.5 per cent in 2020. A robust fiscal response was clearly justified at the time, but, as many warned, it was supposed to be temporary. It wasn’t. Even today, deficits remain higher than in 2019.

Before the pandemic, global public debt stood at 84 per cent of GDP. It now sits at 95 per cent, and in many economies, including the United States, the United Kingdom, and most of the European Union, it is set to keep rising faster than output. By 2030, even under optimistic assumptions, the global debt ratio could surpass its 2020 peak, when the fiscal crisis was at its worst.

Let us be clear: public debt is not inherently evil, nor is there a magic ceiling beyond which it becomes intolerable. But as it climbs, fiscal space shrinks, leaving governments less able to respond when the next crisis arrives. Over time, a toxic mix of prolonged indiscipline, poor economic fortunes, and jittery markets can push a country so far into the hole that only default, open or disguised through inflation, offers a way out.

Attitudes changed after the 2008 global recession, and they will have to change again. Because the post-crisis recovery was so sluggish, austerity became a dirty word, synonymous with self-harm. The notion of “secular stagnation” took hold as interest rates sank to levels many thought were permanently low. Cheap money made chronic deficits look harmless, and balancing the budget began to seem almost old-fashioned. Borrowing, after all, was said to pay for itself.

But the world has moved on, even if mindsets have not. Most US policymakers have simply stopped caring about the rising debt mountain. Elsewhere, governments pay lip service to fiscal discipline, sometimes erecting budget rules or creating “fiscal councils” to look stern about it, but rarely doing much beyond that. If long-term, inflation-adjusted interest rates continue to rise faster than economic growth, debt will keep climbing, and deficits will become ever harder to tame.

That outcome looks highly likely. Across the United States and Europe, ageing populations are driving up dependency ratios, shrinking revenues, and inflating social costs. Defence budgets are expanding. Infrastructure needs are urgent, especially for the green transition. And the next recession or pandemic is not a question of if but of when.

The only alternative to eventual fiscal breakdown is a blend of spending restraint and higher revenues. But first, policymakers must acknowledge just how vulnerable their economies have become. It is long past time to rediscover fiscal discipline and to plan for action rather than rhetoric.

The pandemic may have justified the initial binge, but pretending the hangover will never come due is a dangerous fantasy. As the IMF delegates enjoy the canapés and talk of “resilience” in Washington, the arithmetic of public finance remains unyielding: debt that grows faster than income always wins in the end.