The astronomical increase in the US national debt poses “significant risks” to the global economy and threatens to fuel ahigh inflationaccording to a new warning from International Monetary Fund (IMF).
In its latest Fiscal Monitor, the Washington-based institution said it expects the US to post a fiscal deficit of 7.1% in 2025 – more than triple the level of other advanced economies.
“Loose fiscal policy in the United States puts upward pressure on global interest rates and the dollar. It increases financing costs in the rest of the world, thus exacerbating existing fragilities and risks,” Vitor Gaspar, director of the IMF’s fiscal affairs department, told reporters.
Under current policies, government debt in the United States is expected to double by 2053. The IMF has identified “large fiscal gaps” in the United States in 2023, with government spending exceeding revenues by 8.8% of GDP – an increase of 4.1% compared to the previous year, despite strong economic growth.
If this trend continues, the Congressional Budget Office projects that the national debt will grow to an astonishing $54 trillion over the next decade. Higher interest rates are also exacerbating the pain resulting from rising debt.
If such debt were to materialize, it could jeopardize America’s economic standing in the world.
The U.S. national debt topped $34 trillion in January, following a spending spree by President Biden and Democratic lawmakers, and is on track to top $35 trillion. According to the IMF, the huge amount of spending – while it has helped boost the economy – also risks reigniting inflation and undermining financial stability around the world by raising global borrowing costs.
by Editorial Staff
