IMF chief Kristalina Georgieva said that economic growth alone cannot resolve the US's $40 trillion national debt and that the budget deficit must also be reduced.
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01Summary
- 01The US national debt is at a record high of $40.3 trillion, with a gross debt-to-GDP ratio of about 126%.
- 02IMF chief Kristalina Georgieva warned during meetings in Bangkok that growth cannot deliver adjustments fast enough to address the debt.
- 03Treasury Secretary Scott Bessent has argued that 3% growth, partly from AI, can solve the issue, but experts say 3% growth is rare and 5-6% would be needed.
- 04Net interest payments made up about 15% of federal spending in fiscal 2026, and the average interest rate on federal debt could exceed growth by 2031, risking a debt spiral.
- 05The IMF has warned that the US fiscal trajectory poses a financial stability risk to both the US and the global economy.
02Why it matters
Rising US debt means a larger share of government revenue goes to interest rather than public services, potentially forcing painful spending cuts or tax hikes and threatening global financial stability.
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