Public debt is projected to reach nearly 100% of global GDP by the end of the decade, which will significantly increase pressure on governments, particularly in emerging markets.

As governments face rising debt service costs, they are left with limited resources for social programs and investments, which in turn raises borrowing costs.

The presence of hidden debt can undermine government confidence, leading to higher borrowing costs and an increased risk of a debt crisis.

Legal definitions of public debt often exclude significant sources, such as state-owned enterprises, resulting in off-balance-sheet accumulation that complicates transparency.

A recent IMF policy paper highlighted significant debt disclosure gaps in low-income and emerging market countries, particularly related to non-marketable and SOE debt.

The IMF emphasizes the importance of legal frameworks in ensuring debt transparency, pointing out gaps in public debt legislation across 85 countries.

Debt transparency is essential for effective management and requires clear laws and strong institutions to ensure proper reporting and oversight.

To combat hidden debt, countries should enact and implement laws mandating debt disclosure and establish accountability through audits.

Legal reform can foster consensus and resilience, transforming debt transparency into a long-term commitment rather than a short-term policy choice.

In response to these challenges, the IMF has increased technical assistance on debt management, conducting over 200 missions in two years to improve public debt transparency frameworks.

IMF policies now require detailed debt disclosure, including the identification of public debt holders, to enhance overall transparency.

Transparency involves not only data collection but also legal clarity, institutional accountability, and the establishment of public trust.