IMF chief Kristalina Georgieva has warned that stronger economic growth alone will not resolve the United States’ $40.3 trillion national debt, urging Washington to bring down its budget deficit as well.
Speaking at the International Monetary Fund’s annual meetings in Bangkok, Ms Georgieva said growth could help ease the pressure but would not deliver the necessary adjustment quickly enough.
“Growth, of course, helps but it cannot deliver fast enough the necessary adjustments,” she said.
Her comments were challenged by the US Treasury, which questioned the IMF’s record on economic forecasting.
David Zervos, a counsellor to Treasury Secretary Scott Bessent, said the organisation’s predictions had been “messy” in the past. He pointed to optimistic forecasts before the 2008 global financial crisis and the 1997 Asian financial crisis.
The IMF did not immediately respond to a request for comment.
US Treasury data puts the national debt at $40.3 trillion, a record high and the largest total in the world. Gross debt stands at about 126% of gross domestic product, while publicly held debt is equivalent to 100% of GDP, according to the Committee for a Responsible Federal Budget.
Economic expansion can make existing debt easier to manage, but the debt-to-GDP ratio can continue to rise if government borrowing grows faster than the economy.
The cost of servicing the debt is also taking up a growing share of government finances. Net interest payments accounted for about 15% of federal spending in fiscal 2026 and roughly 20% of revenue.
The Committee for a Responsible Federal Budget has forecast that, by fiscal 2031, the average interest rate on federal debt will be higher than the economy’s growth rate. It said that could contribute to a self-reinforcing debt spiral and eventually require more significant spending cuts or tax rises.
US growth forecast falls short of what is needed
Mr Bessent has argued that sustained US growth of 3%, partly driven by artificial intelligence, could help address the debt burden.
“There’s nothing magic about the $40 trillion number,” he told CNBC in August. “And we can grow our way out of that.”
However, an annual growth rate of 3% has been achieved in only five calendar years, with the most recent being 2019. The US economy is estimated to expand by 2.2% this year, compared with 2% in 2025.
Phillip Swagel, director of the Congressional Budget Office, has said it is “probably not plausible” that growth alone will stabilise the country’s financial trajectory. He said real GDP growth would need to reach 5% to 6%, while changes to government revenue and spending would also be required.
Mr Bessent and White House budget director Russ Vought are understood to be working with President Donald Trump on a broader deficit-reduction plan, although details have not been released.
The IMF has previously warned that America’s fiscal position could pose risks beyond its borders. In its annual review of the US economy published in April, the organisation’s executive directors said the country’s debt trajectory represented a growing financial stability risk for both the US and the global economy because of the importance of the Treasury market to the international financial system.
