IMF Managing Director Kristalina Georgieva’s warning comes as U.S. federal debt exceeds $40 trillion and Treasury yields hover near multidecade highs.
- Georgieva said Bessent acknowledges excessive U.S. debt and deficits, but authorities rely heavily on growth to reduce them.
- Bessent sees growth above 3% and spending restraint lowering the debt-to-GDP ratio, while the IMF forecasts 2.3% growth in 2026 and 2027.
- The U.S. fiscal deficit is projected to exceed 6% of GDP in fiscal 2026.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva said Wednesday that U.S. Treasury Secretary Scott Bessent recognizes that American debt and deficits are too high, but relying on economic growth will not deliver the necessary fiscal adjustments quickly enough.
Asked during the IMF-World Bank annual meetings in Bangkok whether the US needs tighter fiscal policy, Georgieva said Bessent recognizes that US deficit and debt levels need to be made more sustainable.
“Growth of course helps, but it cannot deliver fast enough the necessary adjustments,” Georgieva said, adding that “some [fiscal] measures would be necessary.”
Bessent’s Growth-Led Approach
Bessent has argued that sustained U.S. economic growth above 3%, alongside spending restraint, could improve the country’s fiscal position and reduce its debt relative to gross domestic product (GDP).
“With 3% growth, we grow our way out of this,” Bessent said last month. He has also discussed plans for a fiscal consolidation package aimed at reducing spending, although no public details have been provided.
The IMF’s latest World Economic Outlook, released Tuesday, forecasts U.S. economic growth of 2.3% in both 2026 and 2027.
US Debt Continues To Climb
Georgieva’s remarks come as total U.S. federal debt has surpassed $40 trillion, with the annual budget deficit expected to exceed 6% of GDP in fiscal 2026.
The IMF’s April Fiscal Monitor projected U.S. gross general-government debt would increase from 123.9% of GDP in 2025 to approximately 142% by 2031.
Separately, Congressional Budget Office Director Phillip Swagel said last week that stabilizing federal debt would require annual GDP growth of at least 5%, assuming a 4% interest rate, according to Bloomberg. At a 5% interest rate, he estimated the required inflation-adjusted growth rate at 6%.
Georgieva has also urged governments to set credible medium-term plans to control deficits rather than relying on stronger growth alone, as global public debt is heading toward 100% of GDP before the end of the decade, the highest since World War II. Bessent reportedly missed this week’s meetings to attend to domestic engagements.
Treasury Yields Remain Elevated
The debate over U.S. debt comes amid higher government borrowing costs. The benchmark 10-year U.S. Treasury yield stood around 5.2% on Wednesday, near levels not seen since 2002. The 30-year Treasury yield stayed around 5.549%.
On Stocktwits, retail sentiment for the iShares 20+ Year Treasury Bond ETF (TLT), which tracks long-term U.S. Treasury bonds, and the iShares 7–10 Year Treasury Bond ETF (IEF), which tracks intermediate-term Treasuries, was ‘bullish’.
The IMF warned in its Global Fiscal Stability report that elevated borrowing costs and large fiscal deficits leave governments exposed to greater debt-servicing pressures. Meanwhile, its April Fiscal Monitor projected that U.S. general-government interest payments would approach 5% of GDP by 2031.
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