'We have a huge fiscal problem': Banking group IIF sounds the alarm on record global debt

The chief executive of the Institute of International Finance warned Tuesday that policymakers need to swiftly address record levels of global debt, describing the brewing crisis as a "huge fiscal problem."

IIF CEO Tim Adams sounded the alarm on rising levels of debt while speaking to CNBC's Silvia Amaro at the World Economic Forum in Davos, Switzerland.

The issue has been largely overshadowed at the WEF annual meeting, which runs through to Friday, as the rise of artificial intelligence and conflicts in the Middle East and Ukraine take a higher place on the forum's agenda.

"We have a debt problem globally. We have the highest levels of debt in a non-war period in modern history, and it's at the corporate, household, sovereign, sub-sovereign [levels]," Adams said.

"We have a huge fiscal problem everywhere, including the U.S. We're running [a] deficit at 7% of GDP. We need sobriety, and we need to focus on how we are going to get our fiscal house in order," he added.

The global banking industry's premier trade group said late last year that global debt climbed to a record of $307.4 trillion in the third quarter of 2023, with a substantial increase logged in both high-income countries and emerging markets.

The IIF said that it expected global debt to reach $310 trillion by the end of 2023, warning that elections in over 50 countries and regions this year could usher in a shift toward populism that brings along still-higher debt levels.

"I worry about geopolitics every day," Adams said. "I think this will be a challenging year."

Asked whether high levels of global public debt matter at a time when major central banks are poised to cut interest rates, Adams replied, "It matters because of demographics. We have aging populations in