IMF Says US Growth Alone Won’t Fix Deficit, Debt; More Fiscal Action Needed

The International Monetary Fund said the US will need additional fiscal consolidation measures, arguing that economic growth alone will not be enough to address the country’s rapidly rising debt and budget deficit.

Bloomberg reported on October 14 that IMF Managing Director Kristalina Georgieva, speaking at the IMF-World Bank annual meetings in Bangkok, said US authorities are relying heavily on strong economic growth.

While growth helps improve public finances, it does not deliver the needed adjustment quickly enough, she said.

Georgieva added that “some additional measures” would be needed, reinforcing her view that growth alone will not resolve the US fiscal problem.

Her remarks diverge from the view of US Treasury Secretary Scott Bessent, who has argued that faster economic growth can lower the ratio of national debt and the fiscal deficit.

Bessent has said recently that if the US economy sustains a high growth rate, it can reduce the debt-to-GDP ratio. “What matters is the debt-to-GDP ratio, and we will bend that curve and start bringing it down,” he said last week. “It could happen very quickly.”

He has also emphasized that sustained economic growth above 3% would help reduce the debt ratio. He did not attend this week’s IMF-World Bank annual meetings.

US fiscal conditions continue to worsen. The Congressional Budget Office projected in February that the US debt-to-GDP ratio will exceed 106% by 2030.

That would surpass the previous record set in 1946, immediately after World War II.

The US annual fiscal deficit stands at about $2 trillion, and the deficit is projected to exceed 6% of GDP in the current fiscal year. Total public debt has surpassed $40 trillion for the first time and has increased by about one-third in less than five years.