International Monetary Fund Managing Director Kristalina Georgieva said the United States cannot grow its way out of its mounting public debt, which has passed $40 trillion.
Speaking at the IMF and World Bank annual meetings in Bangkok on Oct. 14, Georgieva singled out advanced economies, namely the U.S. and European countries, as the “worst offenders” on excessive debts. Higher benchmark yields are spilling over to low-income countries that financial markets have already forced to rein in borrowing, she said.
Asked at a press conference whether the U.S. needs tighter fiscal policy, Georgieva said Treasury Secretary Scott Bessent recognizes that U.S. deficit and debt levels are too high and need to be made more sustainable. “The authorities very much rely on strong growth in the United States” to help reduce debt, she said, according to Reuters. “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.”
Bessent did not attend the Bangkok meetings, favoring domestic engagements as the U.S. midterm campaign heats up, Reuters reported. He has argued that sustained growth above 3%, combined with spending restraint, can lower the debt-to-GDP ratio, CNBC reported.
The IMF’s Fiscal Monitor report, released the same day, made the same call and warned that delays in an era of higher borrowing costs would only make the job harder in coming years. Rodrigo Valdes, head of the IMF’s Fiscal Affairs department, said the surge in bond yields had left governments with little fiscal room to maneuver. “We dialled up the urgency of our message,” he said.
The IMF projects U.S. gross debt reaching 142% of GDP by 2031. The federal deficit is expected to top 6% of GDP for fiscal 2026, which ended Sept. 30, compared with 5.8% in fiscal 2025, according to CNBC. Benchmark 10-year yields stood around 5.2% on Oct. 14, near their highest level since 2002.
Georgieva also had advice for the other big economies. “To put it very simply, China needs to spend more, the US has to save more, and Europe has to invest more,” she said.
In its latest World Economic Outlook, released Oct. 13, the IMF forecast U.S. growth of 2.3% for both 2026 and 2027.