By David Lawder WASHINGTON (Reuters) -Economic pressures from steep new U.S. tariffs will push global public debt above pandemic-era levels to nearly 100% of global GDP by the end of the decade as slower growth and trade strain government budgets, the International Monetary Fund said on Wednesday. The IMF's latest Fiscal Monitor projected that global public debt will grow 2.8 percentage points to 95.1% of global GDP in 2025. It said the upward trend was likely to continue, reaching 99.6% of global GDP by 2030.

Global public debt peaked in 2020 at 98.9% of GDP as governments borrowed heavily for COVID-19 relief and output shrank. Debt fell 10 percentage points within two years. But it has been edging back up and the latest forecast showed it accelerating.

"Major tariff announcements by the United States, countermeasures by other countries, and exceptionally high levels of policy uncertainty, are contributing to worsening prospects and heightened risks," the IMF said in the report. It added that this leaves governments with more difficult trade-offs as their budgets are stretched by higher defense spending needs, demands for more social support and rising debt service costs that could grow with more inflationary pressures. Governments' annual fiscal deficits are forecast to average 5.1% of GDP in 2025, compared to 5.0% in 2024, 3.7% in 2022 and 9.5% in 2020, according to the report.

SLOWER GROWTH, MORE DEBT The budget outlook is based on the IMF's "reference forecast" for 2.8% global GDP growth this year in its latest World Economic Outlook, which includes tariff developments through April 4. The economic outlook, as well as the fiscal outlook, would worsen if steeper tariffs from President Donald Trump and retaliatory measures kick in. Debt levels may rise above 117% by 2027 — the level forecast in a severely adverse scenario — "if revenues and economic output decline more significantly than current forecasts due to increased tariffs and weakened growth prospects."

Debt at that level would represent the highest share of GDP since World War Two, the IMF said. Much of the debt growth is concentrated in larger economies, IMF Fiscal Affairs Director Vitor Gaspar told Reuters. About one third of the IMF's 191 member countries now have debt growing at rates faster than before the pandemic, but they make up about 80% of global GDP, he added.

The rising pressures could prompt increasing demands for social spending, especially in countries vulnerable to severe disruptions from trade shocks, that could push spending higher, the report said.