IMF Sounds Alarm Over U.S. National Debt
Already exceeding $38 trillion, the national debt has grown by $2.25 trillion over the past year alone, with projections pointing to a $39 trillion threshold by April. The federal budget deficit has followed a similarly alarming arc, climbing from approximately $1.4 trillion in fiscal year 2022 to roughly $1.8 trillion last year, according to the fund's latest data.
IMF Managing Director Kristalina Georgieva, addressing reporters Wednesday following the fund's annual assessment of US economic policy, offered a blunt assessment: "the current account deficit is too big, to make it very simple for the audience." She added that the issue has been acknowledged by the US administration.
The IMF's Article IV review projects that, absent a meaningful policy shift, US public debt will reach 140% of GDP by 2031 — a milestone that the fund warned poses mounting risks to both domestic and global financial stability. Escalating short-term debt obligations and a rising debt-to-GDP ratio are central to those concerns, the report noted.
The fund called on Washington to adopt a credible fiscal consolidation roadmap capable of bending the debt curve downward. It also pressed the US to engage constructively with trading partners "to address concerns over unfair trade practices and agree on a coordinated reduction in trade restrictions and industrial policy distortions that have negative cross-border effects."
On the contentious issue of tariffs, the IMF added: "Where trade and investment measures (including tariffs and export controls) are put in place for national security reasons, such policies should be applied narrowly."
Despite the fiscal turbulence, the IMF forecasts that US economic growth will hold steady at 2.4% in 2026. However, inflation is not expected to retreat to the Federal Reserve's 2% target until early 2027, as uncertainty continues to cloud both the growth and price outlook.
Notably, the report was finalized prior to the Supreme Court's ruling striking down many of President Donald Trump's tariffs. The IMF confirmed it would evaluate the ruling's broader economic implications in due course.
US public debt — issued to finance budget shortfalls and fund critical programs spanning healthcare, defense, and infrastructure — has long been regarded as a cornerstone safe asset in global markets. Its benchmark interest rates help channel foreign capital into the American economy. Yet analysts caution that unchecked debt accumulation risks driving up borrowing costs and stoking inflationary pressure, with potential consequences that extend well beyond US borders.
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