IMF sounds alarm over growing US national debt

By Gozde Bayar

The huge rise in the US national debt poses "significant risks" to the global economy and threatens to continue fueling high inflation, according to the International Monetary Fund.

The Washington-based institution expects the US to record a fiscal deficit of 7.1% in 2025 – more than triple the level in other advanced economies, according to its latest Fiscal Monitor.

"Loose fiscal policy in the United States exerts upward pressure on global interest rates and the dollar," Fox Business quoted Vitor Gaspar, director of the IMF’s fiscal affairs department, as saying.

"It pushes up funding costs in the rest of the world, thereby exacerbating existing fragilities and risks,” Gaspar added.

Public debt in the US is projected to nearly double by 2053 under current policies.

The IMF identified "large fiscal slippages" in the US in 2023, with government spending surpassing revenue by 8.8% of GDP – a 4.1% increase from the previous year, despite strong economic growth.

Should that debt materialize, it could risk America's economic standing in the world.