IMF chief says growth alone can't cut U.S. debt fast enough
The head of the IMF said the United States cannot grow its way out of its debt, CNBC and Reuters reported. Kristalina Georgieva said some tax or spending steps are needed. She also urged China to rely less on exports and to spend more at home.
The head of the International Monetary Fund said Wednesday that economic growth alone will not shrink America's debt fast enough, CNBC and Reuters reported.
Kristalina Georgieva spoke at the IMF and World Bank annual meetings in Bangkok. "At the Fund, we believe that growth of course helps, but it cannot deliver fast enough the necessary adjustments. So, some (fiscal) measures would be necessary," she said, Reuters reported.
Georgieva said Treasury Secretary Scott Bessent agrees that U.S. deficits and debt are too high, both outlets reported. But "the authorities very much rely on strong growth in the United States" to bring them down, she said.
Bessent has argued that strong growth and spending limits can lower the debt burden, CNBC reported. "With 3% growth, we grow our way out of this," he said last month.
U.S. federal debt is now larger than the whole economy and tops $40 trillion, CNBC reported. The budget deficit for the year that ended Sept. 30 is expected to top 6% of the economy, up from 5.8% the year before.
The IMF expects U.S. growth of 2.3% in both 2026 and 2027, CNBC reported. It projects U.S. government debt will reach 142% of the economy by 2031.
Bessent skipped the Bangkok meetings to focus on matters at home, both outlets reported. Reuters said he favored domestic events as the midterm election campaign heats up.
Georgieva also had advice for China, which was on track for a record trade surplus, Reuters reported. "Shift from exports more toward domestic consumption," she said.
"To put it very simply, China needs to spend more, the US has to save more, and Europe has to invest more," Georgieva added, Reuters reported.
U.S. Treasury yields have climbed to multidecade highs this year, CNBC reported. The 10-year yield stood near 5.2% on Wednesday, close to its highest level since 2002.
Finance ministers from the Group of 20 major economies are due to meet in Bangkok on Thursday, Reuters reported. The United States holds the group's presidency this year.
What we know: The IMF chief says the U.S. needs tax or spending steps, not just growth, to cut its debt.
What we don't: Whether the Trump administration will change its debt plans.
Where outlets agree CNBC and Reuters both report that Georgieva said Bessent recognizes U.S. deficits and debt are too high.
Where they differ The outlets cited here report the same key facts so far.